After unsuccessfully trying to recover losses via mediation and discussion, American Home Mortgage Servicing Inc. (AHMSI) is suing Lender Processing Services (LPS) and affiliate DocX LLC for “improper execution, notarization and recording of assignments of mortgages,” also known as robo-signing. The allegations cover more than 30,000 residential mortgages and the suit was filed in a district court in Dallas County, Texas. AHMSI seeks damages “sufficient to reimburse AHMSI for the millions of dollars in losses” caused by LPS employees robo-signing practices performed on behalf of AHMIS. LPS has responded that as soon as it became aware of the issue, it notified AHMSI, discontinued the practice and “voluntarily reviewed and remediated assignments of mortgage” in addition to terminating the services of DocX. AHMSI, not surprisingly, does not feel that these efforts were sufficient to cover its losses, given that it was recently compelled by Massachusetts attorney general Martha Coakley to “aggressively modify” more than 5,500 loans in Massachusetts as part of a $125 million discriminatory lending settlement.
LPS has announced publicly that it is willing to “resolve these issues amicably” but “disagrees with the allegations…[and] is prepared to vigorously defend against them”. The company also announced that it was “surprised” by the court filing given that it “has offered to reimburse AHMSI for fees and costs associated with AHMIS’s evaluation and re-recording of the remediated assignments of mortgage”. AHMSI responded that the “defendants conveniently ignore that they created tens of thousands of assignments of mortgages and accepted hundreds of thousands of dollars in payment in accordance with the terms of a supposedly nonexistent contract.” AHMSI did not specify the amount of compensation sought, but places the figure “in the millions” according to court documents.
Should LPS pay up?
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