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American Home Mortgage Servicing Sues LPS for ‘Surrogate Signing’

""American Home Mortgage Servicing, Inc."":https://www.ahmsi3.com/servicing/home.asp (AHMSI) is pursuing legal action against ""Lender Processing Services"":http://www.lpsvcs.com/Pages/default.aspx (LPS) and DOCX, one of its affiliates, to recover millions of dollars in losses the servicer allegedly incurred due to improper actions in regards to the documentation of more than 30,000 mortgages.

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Texas-based AHMSI relied on DOCX to process and record lien releases, assignments of mortgage, and other documents on its behalf from April 2008 to November 2009 when LPS revealed to AHMSI that many documents had been signed by ""surrogate signers"" instead of the ""Special Officers"" AHMSI had appointed to the task.

""Upon learning of this unauthorized use of surrogates, we terminated the services of DocX and promptly conducted an extensive, 50-state remediation effort to address any issues caused by this problem,"" said Jordan Dorchuck, AHMI's chief legal officer.

""Our remediation efforts are, and have been, focused on correcting affected assignments of mortgage to ensure they comply with all local, state and federal laws. This has

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been a vast undertaking, necessitating coordination with local counsel in each state,"" Dorchuck added.

For its part, Florida-based LPS said it was ""surprised"" by AHMSI's action. LPS ""disagrees with the allegations contained in the complaint and is prepared to vigorously defend against them,"" the company stated in a press release Tuesday.

""Defendents' practice of ‘surrogate signing' mortgage assignments has forced AHMSI to address a myriad of legal issues, problems and proceedings in venues around the country,"" AHMSI complained in its Tuesday court filing in a Dallas County, Texas District Court.

""It also caused AHMSI to undertake, at substantial expense, an extensive remediation effort to identify and, where necessary, remedy any surrogate-signed assignments of mortgage,"" the filing continues.

LPS does not deny the practice of ""surrogate signing"" by DOCX. However, LPS maintains that it ""immediately notified AHMSI of its discovery of the practice; immediately discontinued the practice; and voluntarily reviewed and remediated assignments of mortgage executed by DOCX using this practice,"" LPS stated in its press release responding to the AHMSI's announcement of the case.

LPS also claims it offered to reimburse AHMSI for costs associated with re-recording of the remediated assignments of mortgage and offered to address other ""actual losses resulting directly from the assignments of mortgage executed on AHMSI's behalf using the surrogate signing practice.""

AHMSI claims it has resorted to legal action after an ""unsuccessful attempt to recover its losses during more than a year of discussion among the parties.""

About Author: Krista Franks Brock

Krista Franks Brock is a professional writer and editor who has covered the mortgage banking and default servicing sectors since 2011. Previously, she served as managing editor of DS News and Southern Distinction, a regional lifestyle publication. Her work has appeared in a variety of print and online publications, including Consumers Digest, Dallas Style and Design, DS News and DSNews.com, MReport and theMReport.com. She holds degrees in journalism and art from the University of Georgia.
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