Foreclosure processor fights Nevada attorney general’s robosigning lawsuit

Catherine Cortez Masto

Catherine Cortez Masto

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.

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  1. My question is why is AG Masto only going after the lenders? What about all the borrowers that lied on their applications such as their "stated incomes"?

    They broke the law as well and should be held just as accountable.

  2. The problem with going after "stated incomes" is that is wasn't only stated income. It was also "Ninja" loans. Not only that, its much easier(read cheaper) and less time consuming to go after the larger institutions than it is hundreds of thousands of individuals and their paperwork.

  3. You nailed Mrlucky. This burst bubble wasn't meant for the common folk to get in. This is all about big time investors extracting capital from a rigged system. It does stink. It stinks real bad. Questions is, when are we going to do something about it?

  4. The best way to win this case for the AG would be to NOT HAVE a jury trial and find a judge that either had his, his families or an acquaintance of his property foreclosed upon illegally. Either that or the financial institutions (they did the dirty deed for) will find a way to get them off the hook via their Capitol Hill cronies. I do think she will need added evidence that might come from the probe of the 4.5 million illegal foreclosures that were carried out by BofA, WF and Countrywide. If the justice system were truly just, it should only take ONE falsified document to throw the whole questions about the impact of what they did out the door. I also think that if found guilty, there needs to be an award made per document and placed into a fund administered by the AG office to get this money back to the people they, in essence, stole from.

    And about the stated income, the lending institutions, during the frenzy, were falsifying the income of the borrowers on their own in many cases to make sure the loan was approved (and they got their %). Yes people were dumb for buying over priced houses they could not afford, however, an equal amount of blame needs to be laid on the industry that propagated this bubble.

    When I bough my first house, there were 3 residential real estate loans available. 30yr fixed VA, 30yr fixed and a 15yr ARM..(you bought points to reduce the interest rate).....and any good banker - yes we used to go talk to our bankers, would steer you clear of the ARM because of the volatility. That was back when the Bank Manager used to approve the loans, send them up the ladder for final approval and would be called to go to your branch office and pick up the check. Ohhhh for the good old days again......ahem