Nevada Attorney General Catherine Cortez Masto sued Lender Processing Services Inc., alleging the company falsified foreclosure documents and demanded kickbacks for referrals, sending the shares down 18 percent.
The company, based in Jacksonville, Florida, engaged in the practice known as robo-signing, requiring employees to execute or notarize as many as 4,000 foreclosure-related documents a day, Masto said today in a statement. She sued yesterday in state court in Las Vegas.
Lender Processing Services “engaged in a pattern and practice of deceptive conduct that willfully misled consumers, courts and the public, resulting in countless foreclosures that were predicated upon false, deceptive and deficient documents that LPS prepared and/or executed,” the attorney general said in the complaint.
Nevada recorded the highest foreclosure rate in the U.S. for the 58th straight month in October, Masto said in the complaint. Deceptive business practices by LPS and its subsidiaries caused many foreclosures to “proceed under false pretenses,” she said.
“The robo-signing crisis in Nevada has been fueled by two main problems: chaos and speed,” Masto said in today’s statement. “We will protect the integrity of the foreclosure process. This lawsuit is the next, logical step in holding the key players in the foreclosure fraud crisis accountable.”
‘Disputes the Allegations’
The company “strongly disputes the allegations,” Michelle Kersch, a Lender Processing Services spokeswoman, said in an e-mail. “LPS has cooperated with the attorney general’s office for more than 14 months to resolve its inquiry in a manner which would benefit the citizens of Nevada.”
The company previously disclosed that it discovered, “during its own internal reviews, potential issues related to some of its past document execution practices,” she said. “However, the company is not aware of any person who was wrongfully foreclosed upon as a result of a potential error in the processes used by our employees.”
The attorney general’s complaint “highlights misconceptions about LPS and seeks to sensationalize a variety of false allegations in a misleading manner,” Kersch said.
Lender Processing Services fell $3.04 or 14 percent to $14.30 in New York Stock Exchange composite trading, the biggest drop since Oct. 4.
The case is State of Nevada v. Lender Processing Services Inc., A-11-653289-B, District Court, Clark County, Nevada (Las Vegas).