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Attorneys General Subpoena Florida Firms in Foreclosure Probe

*_NOTE: Article has been updated to include response from Nationwide Title Clearing._*

The attorneys general for the states of Illinois and California are casting a wider net in their investigations of ""robo-signing"" practices related to foreclosure processing, issuing subpoenas against two Florida-based firms that provide mortgage servicing support to lenders and servicers across the country.

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Illinois Attorney General Lisa Madigan says she has subpoenaed ""Lender Processing Services"":http://www.lpsvcs.com (LPS) and ""Nationwide Title Clearing"":http://www.nwtc.com/. California Attorney General Kamala Harris has sent a subpoena to LPS.

The extensive reach of both companies and their client bases have put them on the attorneys general’s radar.

LPS provides loan servicing support for more than 50 percent of all U.S. mortgages, according to a statement from Madigan’s office. More than 80 financial institutions use LPS to service more than 30 million loans with an outstanding principal balance exceeding $4.5 trillion.

Nationwide Title Clearing specializes in creating, processing, and recording mortgage assignments, which are often needed for a lender to foreclose on a borrower. The firm provides services to eight of the top 10 lenders and mortgage servicers in the country.

The Illinois attorney general says she has received reports of allegations that LPS and Nationwide Title Clearing engaged in the practice of “robo-signing” foreclosure documents filed with the court.

Madigan’s office says her investigation will include a complete review of the accuracy of the systems and services that the two firms provide to the nation’s largest

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lenders, including servicing platforms, foreclosure attorney interaction with these platforms, and the assignment of mortgage process. Madigan has even established a hotline and is asking former employees of the companies to call her to assist in the investigation.

Nationwide Title Clearing says it has not yet been served a subpoena from the Illinois attorney general but intends to cooperate with Madigan’s office to the fullest extent of the law.

“Nationwide Title Clearing welcomes the opportunity to help clear up common misconceptions surrounding this issue,” the company said in a statement.

“The company stands behind their mortgage assignment documents and procedures, which have been thoroughly audited and examined for accuracy,” Nationwide Title Clearing said, adding that “mortgage assignments significantly differ from any form of an affidavit in that they do not require a signed sworn statement of personal knowledge, which clearly is outside the definition of ‘robo-signing.’”

The statement continued, “The company wishes to clarify that it is not a foreclosure services company and does not prepare foreclosure specific affidavits, such as those to evict people from their homes, and has never done so….We have every reason to believe that this issue will be short-lived and will be quickly resolved.”

Attorney General Harris says the risks posed by robo-signing are particularly dangerous in non-judicial foreclosure states such as California, where the courts typically are not involved in overseeing foreclosures.

Her investigative subpoena requires LPS to produce documents and provide written answers to questions related to foreclosure cases from January 1, 2007 through June of this year.

According to a statement from Harris’ office, former LPS employees have testified that designees of the company “robo-signed” foreclosure documents which were prepared and recorded on behalf of many of the largest mortgage lenders and servicers in the country.

LPS did not immediately return requests for comment.

Attorneys general from all 50 states and the District of Columbia are currently in the ""midst of negotiation talks"":http://dsnews.comarticles/states-threaten-high-dollar-lawsuits-in-settlement-power-play-2011-05-25 to settle robo-signing allegations against the nation’s top mortgage servicers.

About Author: Carrie Bay

Carrie Bay is a freelance writer for DS News and its sister publication MReport. She served as online editor for DSNews.com from 2008 through 2011. Prior to joining DS News and the Five Star organization, she managed public relations, marketing, and media relations initiatives for several B2B companies in the financial services, technology, and telecommunications industries. She also wrote for retail and nonprofit organizations upon graduating from Texas A&M University with degrees in journalism and English.
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