Saying there’s nothing illegal about “robosigning” and “surrogate signing,” a big processor of foreclosure paperwork is seeking dismissal of a fraud lawsuit filed by Nevada’s attorney general.
Attorney General Catherine Cortez Masto’s office filed suit last month against Lender Processing Services Inc. (LPS), claiming it was involved in widespread foreclosure fraud involving robosignings and surrogate signings.
In both instances, foreclosure paperwork was signed in a hurried, assembly-line type fashion, and it would be impossible for the officials signing the paperwork to personally attest to its accuracy, Nevada’s lawsuit said.
The state’s suit also complained Lender Processing Services controls a network of foreclosure attorneys and demands these attorneys pay kickbacks disguised as referral fees for receiving foreclosure work — and that “these deceptive fees are passed on to Nevada consumers.”
Earlier, criminal robosigning fraud charges were filed by the state against two LPS officers and four notaries after Cortez Masto’s office said signatures were forged on foreclosure papers and that the documents were then falsely notarized.
In court papers filed Monday responding to the state’s lawsuit in Clark County District Court, attorneys for Lender Processing Services said there’s nothing in the Nevada Deceptive Trade Practices Act outlawing robosigning and surrogate signing.
“Nevada statutory and common law are conclusive that neither activity is illegal,” the LPS response said. “Signing of documents by an authorized agent (robosigning) is expressly permitted. Similarly, surrogate signing is expressly permitted and, by definition, not forgery.”
LPS attorneys wrote in their filing, “robosigning can be defined as the execution of documents in volume on behalf of a lender or loan servicer by a bank employee or third party having express authority to sign such documents.”
“‘Surrogate signing’ occurs when someone signs another person’s name on a document after receiving permission to do so,’’ the attorneys wrote in Monday’s filing.
LPS’s response also said that Cortez Masto’s lawsuit had improperly labeled “administrative fees” as “kickbacks” and said her lawsuit was flawed in this area as she had failed to sue the law firms affiliated with LPS.
LPS attorneys also argued that despite the allegations of paperwork problems, no one had been wrongly foreclosed on.
“Establishing that a technically-flawed assignment does not harm a borrower is the well-established principle that a borrower cannot bring a claim for wrongful foreclosure if a default exists,” their response said.
“Perhaps most significantly, LPS points out that the attorney general’s complaint fails to allege that any document executed by subsidiaries of LPS was incorrect, contained errors or caused any borrower financial harm,” LPS said in a press release about Monday’s court filing.
“Although we have to defend ourselves against allegations that we believe are untrue, we remain committed to working with the Attorney General’s office to resolve these matters,” said LPS CEO Hugh Harris.
LPS is represented in the lawsuit by the law firm Snell & Wilmer LLP in Las Vegas and the firm Berger Singerman in Miami.
LPS is based in Jacksonville, Fla.
Clark County District Court Judge Elizabeth Gonzalez has set a March 13 hearing on the LPS motion to dismiss the state’s lawsuit.
A separate lawsuit filed last month by homeowners against LPS is active in federal court in Las Vegas.