Foreclosure Law Firm Faces State Probe in Florida

Florida Attorney General Bill McCollum has launched a civil investigation into one of the state's largest foreclosure law firms.

[IMAGE]

McCollum says ""Florida Default Law Group, P.L."":http://www.defaultlawfl.com in Tampa appears to be fabricating and presenting false and misleading documents in thousands of foreclosure cases per month.

The attorney general says these documents have been presented in court before judges as actual assignments of mortgages and have later been shown to be legally inadequate or insufficient.

The Florida Default Law Group could not be immediately reached for comment.

[COLUMN_BREAK]

The mortgage crisis has brought to light flaws in the documentation of loan ownership. At the height of the housing boom, when the secondary mortgage market was flourishing, loans changed hands many times as banks bundled and re-bundled pools of mortgages to sell to securities investors.

Oftentimes, the loan contracts weren't revised to reflect the changes in ownership. These paperwork missteps have proven to be a sticking point in some foreclosure cases when the foreclosing institution is required by the judge to show they have a right to seize the property.

A ""statement on the attorney general's Web site"":http://myfloridalegal.com/__85256309005085AB.nsf/0/A4F1B85DCC5D5ACD852577130045B63F?Open&Highlight=0,default says Florida Default Law Group ""appears to be"" a client of Lender Processing Services Inc. (LPS) in Jacksonville, which is also being investigated by McCollum's office.

""LPS"":http://www.lpsvcs.com works with its lender clients to provide documentation proving the bank has ownership rights on a mortgage. The industry news source MortgageOrb.com cited a recent Securities and Exchange Commission (SEC) filing from the company where LPS explained that it had identified a process that caused an error in the notarization of certain documents, some of which were used in foreclosure proceedings.

LPS says it immediately corrected the problem and will cooperate with any investigations by the Florida attorney general's office or other regulatory agencies.