Lorraine Brown, Conspiracy to Commit Mail and Wire Fraud, Florida 2012

Lender Processing Services Inc. to Pay $35 Million in Mortgage Fraud Settlement

A Florida-based lender has agreed to pay $35 million in criminal penalties and forfeiture to address its participation in a six-year scheme to prepare and file more than 1 million fraudulently signed and notarized mortgage-related documents. The settlement follows a felony guilty plea from the chief executive officer of a wholly owned subsidiary, Lorraine Brown.

Lender Processing Services Inc. (LPS), a publicly traded mortgage servicing company based in Jacksonville, Florida, has entered into a non-prosecution agreement with the U.S. Attorney’s Office for the Middle District of Florida. The agreement requires the company to make the payment and meet a series of other conditions.

Lorraine Brown, the former CEO of LPS subsidiary DocX LLC, pleaded guilty on November 20, 2012 in federal court in Jacksonville to conspiracy to commit mail and wire fraud. During her guilty plea, Brown admitted to her leadership role in the scheme.

The non-prosecution agreement also requires LPS to take a number of remedial actions to address the misconduct at DocX. The company has wound down all of DocX’s operations, re-executed and re-filed mortgage assignments as appropriate, and terminated Brown and others. LPS has also demonstrated changes in its compliance, training, and overall approach to ensuring its adherence to the law.

According to the statement of facts accompanying the agreement, before its wind-down, DocX was in the business of assisting residential mortgage servicers with creating and executing mortgage-related documents. Employees of DocX, at the direction of Brown and others, falsified signatures on the documents. These signing practices were used at DocX from at least March 2003 until late 2009, and were implemented to increase profits.

The scheme involved hiring temporary workers to sign as authorized signers, which were then falsely notarized by employees at DocX. The documents were later filed and recorded with local county property records offices across the country. Many of these documents were later relied upon in court proceedings, including property foreclosures and federal bankruptcy actions.

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