The attorneys general of California and Illinois issued subpoenas to two mortgage servicing vendors seeking information about their role in alleged mishandling of foreclosure and other mortgage documents.
Jacksonville, Fla.-based Lender Processing Services was subpoenaed by both states, while Palm Harbor, Fla.-based Nationwide Title Clearing was subpoenaed only in Illinois.
An LPS spokesperson confirmed that the company received the Illinois subpoena, but not the California one. Nationwide Title said it has not received its subpoena. The Illinois Attorney General's office declined to provide the subpoena documents, but in an interview with National Mortgage News, press secretary Robyn Ziegler outlined the key items Attorney General Lisa Madigan's office is seeking from the two companies.
The subpoenas request lists of the servicers and attorneys the companies have contractual agreements with and their current and ex-employees. The subpoenas also seek information on the two companies' overall loan servicing processes, including the default servicing, loss mitigation and information about their software. In addition, the AG is asking for information about each company's policies and procedures for signing legal documents in the foreclosure process, as well as a copy of every affidavit in an Illinois foreclosure or bankruptcy proceeding they processed.
"We've met with all of the big five servicers and obtained information about their foreclosure and loss mitigation procedures and we're now turning our attention to third party vendors that support the servicers in order to drill down to a greater degree in the servicing process," Ziegler told NMN. She also indicated that other servicing vendors might receive subpoenas during the investigation.
In a prepared statement, Nationwide Title Clearing said it will cooperate with the AG's office in order to "help clear up common misconceptions surrounding this issue and wishes to help the public gain a deeper understanding of normal mortgage industry documents and processes."
But the company added that it has never prepared foreclosure-specific affidavits.
"Although Nationwide Title Clearing has rigorously audited quality controls and standards, mortgage assignments significantly differ from any form of an affidavit in that they do not require a signed sworn statement of personal knowledge, which clearly is outside the definition of 'robo-signing,'" the statement reads.
"A majority of Nationwide's business does not come from assignments, but rather its primary business stems from other services such as property reports, lien releases and other services to support the mortgage servicing industry," the company added. "It is important to clarify that the note, the mortgage, assignments and all other documents pertinent to land records, filed throughout the entire life of the loan, are often presented at foreclosures."
"We have every reason to believe that this issue will be short-lived and will be quickly resolved."
In a press release, Madigan's office said Nationwide Title provides assignment services to eight of the top 10 lenders and mortgage servicers in the country, "which are often needed for a lender to foreclose on a borrower."
It further claims LPS provides loan servicing support for more than 50% of all mortgages in the U.S., with more than 80 financial institutions using LPS to service more than 30 million loans.
LPS' businesses consist primarily of both technology and services for mortgage lenders and servicers. It holds a majority market share among providers of servicing system of record platforms. Additional technology facilitates the company's performing, default and REO services that it performs on behalf of servicers.
The company did not provide a response to NMN's request for comment.
California's subpoena comes in the same week that Attorney General Kamala Harris announced a Mortgage Fraud Strike Force that combines state resources with Department of Justice attorneys and investigators to monitor and prosecute violations in mortgage origination and servicing.
The subpoena covers the time from Jan. 1, 2007 to June 24, 2011 and requests that LPS produce documents and provide written answers to questions from the Attorney General's office. A spokesperson for the office could not provide specific details about what documents or questions the AG is seeking from LPS.
Press statements from both AG's offices indicate they will focus on robosigning allegations as they pertain to the way servicer employees sign affidavits and what knowledge they possess about the content and accuracy of the documents—in contrast to previous inquiries by other enforcement agencies that have focused on allegations that notaries certified signatures that were actually forgeries.
