From Daily Finance, by Abigail Field.
The mortgage foreclosure and robo-signing mess keeps getting messier. And the giant banks that have been caught up in the crisis have plenty of company, including Lender Processing Services and its subsidiary LPS, which plays a huge role in foreclosure process now in high gear across the U.S. LPS describes itself as the nation’s “number one provider of mortgage processing services, settlement services and default solutions,” working with all the top-50 banks in the country.
To provide its “default solutions,” LPS maintains a nationwide network of attorneys who do enormous volumes of foreclosure work. The core of the service LPS provides is a software application that enables its attorneys to communicate with LPS and with LPS’s financial institution clients. Documents are uploaded, and sometimes created, in the system and then distributed for signing, often as it turns out, by robo-signers. LPS makes money from its default services work primarily via the various fees it charges attorneys it refers cases — far more so than from the fees it charges its bank/mortgage servicer clients. …
At issue is the way money flows between the law firms and LPS/Prommis. Specifically, does the LPS/Prommis business model constitute illegal fee-sharing and/or kickbacks? Sharing legal fees with nonlawyers is illegal, and the neither LPS nor Prommis are law firms. If plaintiffs win either case, it’s hard to see how the companies can continue in their present form.
Despite its explanation of the multiple signatures per name, the press release doesn’t get at why it happened. O. Max Gardner, a consumer bankruptcy attorney in North Carolina, provides this colorful explanation:
“Do you remember that I Love Lucy episode where Lucy and Ethel have jobs at a factory and they have to take chocolates off a conveyor belt and wrap them before putting them in boxes, and the candy just keeps coming faster and faster, and they just can’t keep up, and well, chaos ensues. It’s like that. The volume of these documents is just overwhelming, and you know, one of the signers needs to take a break, or is out sick or something, and the conveyor belt doesn’t stop. Someone has to keep signing.”
Given Goebel’s description of the document execution process as a “production line,” Gardner’s analogyseems particularly apt.
Most definitely a must read article and one of the better written ones describing robo-signers.