An event of extreme importance to the housing market has just happened; below is the Department of Justice press release made public at 5.01 pm today.
This will have tremendous impact on Banks, Servicers, Remic underwriters and most importantly will have a chilling effect on foreclosure proceedings nationwide.
Obviously thousands and thousands of homeowners have been deprived of their homes in proceedings tainted by these fraudulent documents.
And just as importantly many hundreds of thousands of mortgages and notes secured by them that were "lost" and replaced with fraudulently created documents that might have been used to effect transfer of these documents into various pools of mortgages subsequently sliced, diced and sold worldwide based on their legally owning these mortgages, will have to be scrutinized for validity.
And then, of course, the tax status of REMICs will also be brought into question if it turns out that they contain mortgages that were transferred based on these fraudulent documents.
This is just the beginning of the next mortgage crisis.... and this one may lead to the failure of a major bank.
In the spotlight will be Bank of America and of course Wells Fargo to name just two of the biggest players.
Time for the Fed to step in and take care of this mess once and for all - after all it is the trade organization that represents the interest of it members only - the banks in the USA!
______________________________________________________________________________
TUESDAY, NOVEMBER 20, 2012
(202) 514-2007
FORMER EXECUTIVE AT FLORIDA-BASED LENDER
PROCESSING SERVICES INC.
ADMITS ROLE IN MORTGAGE-RELATED DOCUMENT FRAUD
SCHEME
Over 1 Million Documents Prepared and Filed with
Forged and False Signatures, Fraudulent Notarizations
WASHINGTON – A former executive of Lender Processing Services
Inc. (LPS) – a publicly traded company based in Jacksonville, Fla. – pleaded
guilty today, admitting her participation in a six-year scheme to prepare and
file more than 1 million fraudulently signed and notarized mortgage-related
documents with property recorders’ offices throughout the United States.
The guilty plea of Lorraine Brown, 56, of Alpharetta, Ga.,
was announced by Assistant Attorney General Lanny A. Breuer of the Justice
Department’s Criminal Division; U.S. Attorney for the Middle District of
Florida Robert E. O’Neill; and Michael Steinbach, Special Agent in Charge of
the FBI’s Jacksonville Field Office.
The plea, to conspiracy to commit mail and wire fraud, was entered before U.S.
Magistrate Judge Monte C. Richardson in Jacksonville federal court. Brown
faces a maximum potential penalty of five years in prison and a $250,000 fine,
or twice the gross gain or loss from the crime. The date for sentencing
has not yet been set.
“Lorraine Brown participated in a scheme to fabricate mortgage-related
documents at the height of the financial crisis,” said Assistant Attorney
General Breuer. “She was responsible for more than a million fraudulent
documents entering the system, directing company employees to forge and falsify
documents relied on by property recorders, title insurers and others.
Appropriately, she now faces the prospect of prison time.”
“Homeownership is a huge step for American citizens,” said U.S. Attorney O’Neill.
“The process itself is often intimidating and lengthy. Consumers rely
heavily on the integrity and due diligence of those serving as representatives
throughout this process to secure their investments. When the integrity
of this process is compromised, illegally, public confidence is eroded.
We must work to assure the public that their investments are sound, worthy, and
protected.”
Special Agent in Charge Steinbach stated, “Our country is increasingly faced
with more pervasive and sophisticated fraud schemes that have the potential to
disrupt entire markets and the economy as a whole. The FBI, with our
partners, is committed to addressing these schemes. As these schemes
continue to evolve and become more sophisticated, so too will we.”
Brown was
the chief executive of DocX LLC, which was involved in the preparation
and recordation of mortgage-related documents throughout the country since the
1990s. DocX was acquired by an LPS predecessor company, and was part of
LPS’s business when LPS was formed as a stand-alone company in 2008. At
that time, DocX was rebranded as “LPS Document Solutions, a Division of
LPS.” Brown was the president and senior managing director of LPS
Document Solutions, which constituted DocX’s operations.
DocX’s main clients were residential mortgage servicers,
which typically undertake certain actions for the owners of mortgage-backed
promissory notes. Servicers hired DocX to, among other things, assist in
creating and executing mortgage-related documents filed with recorders’
offices. Only specific personnel at DocX were authorized by the clients
to sign the documents.
According to plea documents filed today, employees of DocX,
at the direction of Brown and others, began forging and falsifying signatures
on the mortgage-related documents that they had been hired to prepare and file
with property recorders’ offices. Unbeknownst to the clients, Brown
directed the authorized signers to allow other DocX employees, who were not
authorized signers, to sign the mortgage-related documents and have them
notarized as if actually executed by the authorized DocX employee.
Also according
to plea documents, Brown implemented these signing practices at DocX to
enable DocX and Brown to generate greater profit. Specifically, DocX was
able to create, execute and file larger volumes of documents using these
signing and notarization practices. To further increase profits, DocX
also hired temporary workers to sign as authorized signers. These
temporary employees worked for much lower costs and without the quality control
represented by Brown to DocX’s clients. Some of these temporary workers
were able to sign thousands of mortgage-related instruments a day.
Between 2003 and 2009, DocX generated approximately $60 million in gross
revenue.
After these documents were falsely signed and fraudulently notarized, Brown authorized
DocX employees to file and record them with local county property records
offices across the country. Many of these documents – particularly
mortgage assignments, lost note affidavits and lost assignment affidavits –
were later relied upon in court proceedings, including property foreclosures
and federal bankruptcy actions. Brown admitted she understood that
property recorders, courts, title insurers and homeowners relied upon the
documents as genuine.
Brown also admitted that she and others also took various steps to conceal
their actions from clients, LPS corporate headquarters, law enforcement
authorities and others. These actions included testing new employees to
ensure they could mimic signatures, lying to LPS internal audit personnel
during reviews of the operation in 2009, making false exculpatory statements
after being confronted by LPS corporate officials about the acts and lying to
the FBI during its investigation. LPS closed DocX in early 2010.
This case is being prosecuted by Trial Attorney Ryan Rohlfsen and Assistant
Chief Glenn S. Leon of the Criminal Division’s Fraud Section and Assistant U.S.
Attorney Mark B. Devereaux of the U.S. Attorney’s Office for the Middle
District of Florida. This case is being investigated by the FBI, with
assistance from the state of Florida’s Department of Financial
Services.
Today’s conviction is part of efforts underway by President Obama’s Financial
Fraud Enforcement Task Force (FFETF), which was created in November 2009
to wage an aggressive, coordinated and proactive effort to investigate and
prosecute financial crimes. With more than 20 federal agencies, 94 U.S.
attorneys’ offices and state and local partners, it’s the broadest coalition of
law enforcement, investigatory and regulatory agencies ever assembled to combat
fraud. Since its formation, the task force has made great strides in
facilitating increased investigation and prosecution of financial crimes;
enhancing coordination and cooperation among federal, state and local
authorities; addressing discrimination in the lending and financial markets and
conducting outreach to the public, victims, financial institutions and other
organizations. Over the past three fiscal years, the Justice Department has
filed more than 10,000 financial fraud cases against nearly 15,000 defendants,
including more than 2,700 mortgage fraud defendants. For
more information on the task force, visit www.stopfraud.gov.
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12-1400
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PLEASE USE THE CONTACTS IN THE MESSAGE OR CALL THE OFFICE OF PUBLIC AFFAIRS AT 202-514-2007.
