American Home Mortgage Files Suit Against LPS Over ‘Robo-Signing’

Just one month ago RE-Insider reported that the Michigan Attorney General had issued criminal subpoenas to Lender Processing Services, Inc. (LPS) in reference to “robo-signing” documents that they hadn’t read. On Tuesday, American Home Mortgage Services, Inc. took it one step further and filed a lawsuit against them.

In the suit, American Home Mortgage accuses LPS and its DocX affiliate of improperly signing mortgage documents. The suit alleges more than 30,000 residential mortgages across the country were affected by “improper execution, notarization and recording of assignments of mortgage.”

After more than a year of unsuccessful attempts to recover losses from LPS, American Home Mortgage alleges that LPS first promised to indemnify the mortgage company and then later denied responsibility because their contract with AHM had already expired.

According to a story on Law360.com:

The actions have caused American Home Mortgage to lose millions of dollars on assignments affecting more than 30,000 residential mortgages, the complaint says. The purported surrogate signing has also forced the residential loan servicer to defend itself in litigation across the country and to pay to find and fix robo-signed assignments of mortgage, the complaint says.

Tuesday’s allegations are not the first claims LPS has faced over its alleged surrogate signing. In December, the International Brotherhood of Electrical Workers Local 164 Pension Fund launched a derivative shareholder suit in Delaware Chancery Court over LPS’ alleged encouragement of the surrogate signing of mortgage approvals, in a bid to oust Chairman Lee A. Kennedy and six others from the board of the company.

We’ll have to wait and see how this plays out. In the meantime, agents should continue to beware of who they give business to in this turbulent housing market.