3rd UPDATE:Conn AG Seeks Information On Foreclosure Law Firms
June 09 2009 - 3:09AM
Dow Jones News
Connecticut's attorney general is seeking information from
mortgage lenders Fannie Mae (FNM) and Freddie Mac (FRE) and
mortgage-processing services company Lender Processing Services
Inc. (LPS) on how they select law firms for foreclosure
services.
In a statement Monday, Connecticut Attorney General Richard
Blumenthal said his office is probing complaints that the majority
of the state's foreclosures are assigned to a select group of law
firms and complaints from consumers that they didn't receive proper
foreclosure notices from marshals.
"Dominance over foreclosure service by a few select law firms
and marshals has spurred complaints about improper or illegal
practices - wrongfully allocating work to non-marshals, forging
papers, failing to serve papers, and making kickbacks," Blumenthal
said in a statement. "Concentrating this work in a few hands can be
severely problematic - causing unconscionable costs and failed
notice delivery."
Blumenthal's office initially said he was seeking information
from banking technology company Fidelity National Information
Services Inc. (FIS), but later clarified Blumenthal was seeking
information from LPS.
LPS was spun off from Fidelity National last year.
Blumenthal said he is seeking the identity of all Connecticut
law firms employed for foreclosure actions from 2007 to the
present, details on the criteria used in selecting those firms,
information on fees paid to those law firms and any fees paid by
the law firms to the lenders and any complaints by Connecticut
consumers regarding failures to provide proper notice.
"We will cooperate with the attorney general's office on this
matter and provide information to assist in the review," said Brian
Faith, a Fannie Mae spokesman.
A Freddie Mac spokesman didn't immediately return a phone call
seeking comment Monday.
Michelle Kersch, a LPS spokeswoman, said the company hasn't
received formal notification from Blumenthal's office, but will
respond to the request for information when it's received.
Kersch noted that the company doesn't make attorney selection
for its clients or their investors and that LPS isn't an investor
or an authorized servicing agent. She said the company's business
model is different from "investors, such as Fannie Mae or Freddie
Mac."
"LPS provides its clients with a proprietary technology system
and associated administrative services that enable them to manage
their default portfolios," Kersch said. "Law firms that utilize
LPS' technology are selected by the servicer or designated by the
investor. As such, LPS' network of attorneys is comprised of the
law firms that are selected by its servicing clients."
-By Chad Bray, Dow Jones Newswires; 212-227-2017;
chad.bray@dowjones.com