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California, Illinois AGs step up mortgage probe

California, Illinois AGs step up mortgage probe

May 26th, 2011 in News

LOS ANGELES (AP) - Prosecutors in California and Illinois are investigating allegations that Lender Processing Services Inc., one of the nation's largest mortgage processing companies, engaged in the illegal practice of "robosigning" - signing thousands of foreclosure documents without checking their accuracy.

The move comes as top attorneys general step up the investigation of questionable mortgage-industry practices. On Monday, California Attorney General Kamala Harris set up a task force to pursue criminal and civil judgments on a broad spectrum of mortgage fraud cases. Last week, New York Attorney General Eric Schneiderman sought records from three major Wall Street banks as part of a broad investigation into the mortgage crisis that fueled the recession.

All 50 state AGs and federal officials also are negotiating a settlement with big bank lenders on certain mortgage practices, including robosigning.

Illinois Attorney General Lisa Madigan on Wednesday issued subpoenas to Lender Processing Services and Nationwide Title Clearing Inc., two Florida-based corporations that provide "document preparation services" and other loan management services to the largest banks and mortgage lenders. California AG Harris has subpoenaed Lender Processing.

Lender Processing is one of 16 banks and servicers that the federal government last month ordered to reimburse homeowners who were improperly foreclosed upon. Messages left Wednesday for a company representative weren't returned. Shares of LPS fell 18 cents to close at $25.16.

Nationwide Title said it can't comment on specifics at this time as it has not yet been served a subpoena from the Illinois AG. In a statement, the company said that it "stands behind" its mortgage assignment documents and procedures and "intends to cooperate with the Attorney General's office to the fullest extent of the law."