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Litigation Embroiled LPS On The Edge After CEO Quits "For Health Reasons"

Tyler Durden's picture




 

LPS, which together with MERS, has long been at the heart of the fraudclosure scandal courtesy of loan appraisals which even the FDIC claims were/are fraudulent, just fired a big red warning sign about its continued existence as a going concern after the CEO, Jeffrey Carbiener, just announced he is resigning "due to health concerns." Well, everyone knows what that means. From Reuters: "Lender Processing Services Inc (LPS.N) said its Chief Executive Jeffrey Carbiener resigned due to medical reasons and would be replaced in the interim by Lee Kennedy, its executive chairman. The mortgage processing services provider said its board had established a committee to search for a replacement. Kennedy, who was the executive chairman and CEO of LPS's former parent Fidelity National Information Services, will remain the executive chairman, the company said in a statement." Somehow we doubt the market will be too happy with this development, which could well be the beginning of the end for the $1.7 billion company.

From Reuters:

Carbiener has agreed to serve in an advisory capacity, at a time when LPS is facing various faces various legal and regulatory issues over its alleged role in wrongful foreclosure practices.

Shares of the Jacksonville, Florida-based company were down 5 percent at $19.50 in trading after the bell. They closed at $20.54 on Wednesday on the New York Stock Exchange.

Coming at a time when there is an increasing scramble by the big banks to settle putback claims litigation, the departure of one of the key chess pieces is likely a notable development. However, as to how this impacts the big game, or what the other pieces are likely to do at this point, nobody knows. The situation is beyond fluid.

 

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Wed, 07/06/2011 - 17:53 | 1431007 Sokhmate
Sokhmate's picture

He'll probably soon get Ken-Lay'd in the media, never to be heard of again.

Wed, 07/06/2011 - 17:55 | 1431015 Gubbmint Cheese
Gubbmint Cheese's picture

Matt Simmons Celebrity Hot Tub..

Wed, 07/06/2011 - 18:07 | 1431037 squexx
squexx's picture

I'm sure his condition is "terminal!" He will eventually die from it, assisted of course by a double tap to his head (with his arms tied behind his back) or "accidently" falling out of his 20th floor apartment.

Wed, 07/06/2011 - 18:31 | 1431087 Piranhanoia
Piranhanoia's picture

They only have 1.7 b in assets?  Talk about your bankruptcy remote fraudulent corpse. Get the addresses of los duenos. LSI Appraisal, LSI Title, LPS, DocX, Fidelity (this, that and the other), as well as personal liabilty for every corporation found to use them to forge the documents to steal homes, businesses, assets, lives.  The end of the beginning may be in sight. Then comes the guillotine. Take names. The folks that pull the rope and dump the basket need to know that the subject of their avocation deserves what they get when law enforcement fails us as a nation.

Wed, 07/06/2011 - 19:15 | 1431190 ArkansasAngie
ArkansasAngie's picture

What we need is an old fashion Law and Order candidate.  I'm going to Washingto to clean house.  I'm going to force the DOJ to go for criminal charges. 

This has to stop in a nice and controlled manner.  It has to be unwound and the assets of insolvent companys sold at economically reasonable and feasible prices.

You know porn when you see it.

You also know fraud when you see it.

To heck with these administrative slaps.  We want jury trials.

Wed, 07/06/2011 - 21:17 | 1431420 Careless Whisper
Careless Whisper's picture

FNF could be the next domino to fall.

Schuette said criminal investigative subpoenas were sent to four companies, which have until June 30 to provide documents "regarding the mortgage processing companies' operations in relation to foreclosure and/or bankruptcy-related document processing," Schuette's office said in a prepared statement.

http://www.businessweek.com/ap/financialnews/D9NT395O0.htm

Schuette said the companies are affiliated and lists them as Lender Processing Services Inc., Fidelity National Financial Inc., CT Corporation System, and DocX.

Wed, 07/06/2011 - 18:36 | 1431093 Caviar Emptor
Caviar Emptor's picture

My ZH friends and Tyler:

The NY Fed has put out a paper, announced in today's Dow Jones News, that "Refines the central bank's understanding of how changes in growth and unemployment shape the nation's inflation-creating potential". 

In other words they are talking about what we (and especially me) have been discussing here on ZH: that the old paradigm no longer works. And in my opinion the fact that they have done this research at all is proof that they no longer know what to do given the new realities. 

As you know I believe in my theory of Biflation: a new beast that defies all prior notions of the inter-relations referred to above. And I further believe that Biflation is an offshoot of the Fed's policies over the course of the last 3 decades going back to "supply-side" economic/political policies. We're in uncharted waters! This is big. I'll take another bow. 

Here's the report from Dow Jones: 

 

NY Fed Paper Divines Linkage Between Unemployment, Inflation

By MICHAEL S. DERBY 

 

A DOW JONES NEWSWIRES COLUMN

NEW YORK -- Economists at the New York Federal Reserve are refining the central bank's understanding of how changes in growth and unemployment shape the nation's inflation-creating potential.

 

In a newly published paper, analysts Richard Peach, Robert Rich and Anna Cororaton say that contrary to the way many observers now understand it, there is not an automatic and continuous relationship between hiring and prices. Their work addresses a critical notion, which holds that the difference between the economy's resource utilization rate and its unemployment rate has a lot to say about whether inflation will rise or fall.

The concept is particularly important right now because most Federal Reserve officials believe that as long as growth is modest and unemployment rates are high, the economy is unlikely to generate price pressures that would require the central bank to tighten monetary policy. This contention has allowed the Fed to shrug off the commodity- and energy-fueled increase in headline inflation as most likely a temporary phenomenon, and leave policy at very easy levels.

The influence of unemployment on inflation has always been bounded by uncertainty. The paper observes evidence since the middle of the 1980s and the middle of the last decade shows a reduced relationship between unemployment and inflation. There are also issues with the concept of resources utilization, since it purports to weigh actual growth rates against a theorized potential growth rate no one can be sure exists.

The paper based its findings on the relationship between the unemployment rate and what economists call Nairu, or the nonaccelerating inflation rate of unemployment. Economists argue over Nairu's true level, but Fed long-range forecasts suggest central bankers think it lies between 5.2% and 5.6%. The closer the unemployment rate, now at 9.1%, converges with this range, the greater the economy's potential to create inflation.

According to the paper, the relationship between these two factors is "non-linear." The authors wrote "the link from activity gaps to inflation is episodic, that is, the relationship is relevant only when conditions in the economy are either extremely slack or extremely tight." They refer to the relationship as a "threshold effect."

"The impact of the unemployment gap on inflation differs markedly within and outside the estimated thresholds, with economically and statistically significant effects associated with deviations of the unemployment rate from the Nairu larger than 1.6 percentage points in absolute value," the economists wrote.

Given the current level of unemployment, it appears the work of the New York Fed economists provides support for the Fed's current confidence inflation pressures will remain under control for some time to come. Central bank forecasts for inflation expect the jobless rate to range between a still historically high 7% to 7.5% range by 2013. If that forecast holds, it should keep the gap wide enough to provide a meaningful headwind to rising inflation.

That said, if food and energy prices were to regain their upward momentum, it could again renew the public's anxiety about future inflation, which in the view of economists and policy makers would create the potential for actual inflation to rise. It still remains entirely possible Fed officials could confront an environment of unwelcome inflation gains even with continued high rates of unemployment.

--Michael S. Derby, a special writer with Dow Jones Newswires, has covered the Federal Reserve since 2001. 

 

Thu, 07/07/2011 - 00:09 | 1431693 StychoKiller
StychoKiller's picture

In a newly published paper, analysts Richard Peach, Robert Rich and Anna Cororaton say that contrary to the way many observers now understand it, there is not an automatic and continuous relationship between hiring and prices.

Non-linear differential equations!

Wed, 07/06/2011 - 19:27 | 1431209 TruthInSunshine
TruthInSunshine's picture

On top of the MERS 'title eating virus,' which has only begun to rapidly spread (after much talk of it as a mere 'hypothetical' problem for months and even years now, and which is about to trigger a wave of newly liberated Americans that stop making all mortgage payments on their underwater dream homes), the shit's about to get even more real (no sarc; really). These 'initial' cuts at the banks and in the financial sector will be remember as the teeny-tiny tip of the sword.

IFR - Job cuts at major banks intensify


...senior bosses say [there] is likely to be an industry-wide culling of staff in response to a sharp downturn in demand for trading and investment banking services.


After more than two years of hiring and robust activity, some are now predicting the biggest investment banking lay-offs since the credit crisis, as managers pare back their headcounts in preparation for what many see as a possible prolonged slump in activity.

Credit Suisse, Goldman Sachs, Lloyds and RBS have been the first to move, slashing hundreds of banker positions in recent days. But the consensus seems to be growing within the industry that more banks will soon follow as falling revenues make cost-cutting more urgent.

"Nobody is really prepared for what might come," said one senior capital markets banker at a US firm in New York. "You can't even fill gaps in the business any more because investors expect you to be more disciplined; they are expecting a real focus on the short-term costs."

Wed, 07/06/2011 - 19:25 | 1431218 williambanzai7
williambanzai7's picture

Who wants that job?

Wed, 07/06/2011 - 19:33 | 1431233 TruthInSunshine
TruthInSunshine's picture

No one sane.

On a somewhat related note:

NO. THERE’S NO LIFE AT MERS

 

Mortgage Electronic Registration Systems, Inc (MERS) has a very long history. The beginning stages have remained a mystery until now.

In 1989, Brian Hershkowitz developed the “Whole Loan Book Entry” concept while serving as a director for the Mortgage Bankers Association (MBA). In 1990, he first introduced this concept to seven different industry group; Document Custodian, Originators, Servicers, Title Insurers, County Recorders, Government Sponsored Enterprises (GSE’s) and Warehouse/Interim Lenders. The reception was very positive and it was viewed as a very useful recording system to be used for how equity and debt securities could be identified and managed.

In 1991, Mr. Hershkowtiz published Farming It Out in Mortgage Banking Magazine. His main discussion in this article is primarily about getting the opinion of the experts in the technology outsourcing service industry. In 1992, Mr. Hershkowitz published another article called Cutting Edge Solutions in Mortgage Banking Magazine. In this particular article he mentions the actual meeting that took place at the Mortgage Bankers Association of America (MBA) headquarters with many key players that are known today as some of MERSCORP’s shareholders, such as, Fannie Mae and Freddie Mac. In this meeting they discussed a “System” that will bring changes in mortgage records.

Mr. Hershkowitz went on to become President and COO of LandSafe Credit, a leading settlement service provider that was a subsidiary of Countrywide. Mr. Hershkowitz also spent several years serving Countrywide in the areas of strategic planning and executive management.

In 2001, Mr. Hershkowitz became Executive Vice President at Fidelity National Information Services (FNIS) and President of its mortgage and information services division. His responsibilities included management of the Company’s data offerings, including public records information, credit reporting information, flood hazard compliance data, real estate tax information and collateral valuation services. He left FNIS in November of 2006 to become Chief Executive Officer of Maximum Value Group, a consulting firm focused on providing advice to private equity and other market participants in the area of banking and mortgages.

ENTER THE X-FILES

MERS has evolved into a totally different purpose today.

Mortgage Electronic Registration Systems, Inc. is a wholly owned subsidiary of MERSCORP Inc., located at 1595 Spring Hill Rd Ste 310 Vienna, VA 22182.

MERS was founded by the mortgage industry. MERS tracks “changes” in the ownership of the beneficial and servicing interests of mortgage loans as they are bought and sold among MERS members or others. Simultaneously, MERS acts as the “mortgagee” of record in a “nominee” capacity (a form of agency) for the beneficial owners of these loans.

To ensure widespread acceptance within the industry, MERS sought to have security instruments modified to contain MERS as the original mortgagee (MOM) language. MERS began to change decades of business practices after the two biggest mortgage funders in the U.S. the Federal Home Loan Mortgage Corporation (Freddie Mac) and the Ferderal National Mortgage Association (Fannie Mae) modified their Uniform Security Instruments to include MOM language. Their approval opened the doors to incorporate MERS into loans at origination.

Soon after, U.S. government agencies like the Veterans Administration, Federal Housing administration and Government National Mortgage Association (Ginne Mae), and several state housing agencies followed both Fannie/Freddie to approve MERS.

More than 60 percent of all newly-originated mortgages are registered in MERS. Its mission is to register every mortgage loan in the United States on the MERS System. Since 1997, more than 65 million home mortgages have been assigned a Mortgage Identification Number (MIN) and have been registered on the MERS System.

The mortgage-backed security (MBS) sector tested the viability of MERS because a substantial number of mortgages are securitized in the secondary market. In February 1999, Lehman Brothers was the first company to include MERS registered loans in a MBS.

Moody’s Investor Service issued an independent Structured Finance special report  on MERS and it’s impact of MBS transactions and found that where the securitzer used MERS, new assignments of mortgages to the trustee of MBS transactions were not necessary.

Since MERS is a privately owned data system and not public, all mortgages and assignments must be recorded in order to perfect a lien. Since they failed to record assignments when these loans often traded ownership several times before any assignment was created, the legal issue is apparent. MERS may have destroyed the public land records by breaking the chain of title to millions of homes.

IN MERS CEO’S OWN WORDS

In or around the summer of 1997, MERSCORP President and CEO R.K. Arnold wrote, “Yes, There is life on MERS” Mr. Arnold stated, “Some county recorders have expressed concerns that MERS will eliminate their offices nationwide or destroy the public land records by breaking the chain of title. As implemented, MERS will not create a break in the chain of title, and, because MERS is premised on an assignment recorded in the public land records, MERS cannot work without county recorders.”

In this same article Mr. Arnold also states “The sheer volume of transfers between servicing companies and the resulting need to record assignments caused a heavy drag on the secondary market. Loan servicing can trade several times before even the first assignment in a chain is recorded, leaving the public land records clogged with unnecessary assignments. Sometimes these assignments are recorded in the wrong sequence, clouding title to the property”. Mr. Arnold never mentions the fact that the mortgage notes have been securitized, thereby becoming “negotiable securities” under the Uniform Commercial Code.

In an interview for The New York Times, Mr. Arnold said, “that his company had benefited not only banks, but also millions of borrowers who could not have obtained loans without the money-saving efficiencies MERS brought to the mortgage trade.”

Mr. Arnold went on to say that, ” far from posing a hurdle for homeowners, MERS had helped reduce mortgage fraud and imposed order on a sprawling industry where, in the past, lenders might have gone out of business and left no contact information for borrowers seeking assistance.”

“We’re not this big bad animal,” Mr. Arnold said. “This crisis that we’ve had in the mortgage business would have been a lot worse without MERS.”

Unfortunately, even a simple search in the Florida Land Records proves the opposite to be the case. Researchers have  easily found affidavits of lost assignments actually stating, “the said mortgage was assigned to Mortgage Electronic Registration Systems, Inc., from “XXXXXXX”, the original of the said assignment to Mortgage Electronic Registration Systems, Inc., was lost, misplaced or destroyed before same could be placed of record with the Florida Land Records County Clerk’s office; That, “XXXXXXX”, it’s successors and/or assignee is no longer in business/or do not respond to our request for a duplicate assignment, and therefore, a duplicate original of said assignment cannot be obtained.”

According to affidavits such as these, not only have the borrowers lost contact with the lenders, but the same is true that MERS did as well.

On September 25, 2009, Mr. R.K. Arnold was deposed in Alabama. Mr. Arnold admitted MERS does not have a beneficial interest in any loan, does not loan money and does not suffer a default if monies are not paid. On November 11, 2009, William C. Hultman was deposed in Alabama and made the same admissions.

Yet again, researchers have easily located affidavits recorded in the Florida Land Records stating “That said Deed of Trust has not been assigned to any other party and that MORTGAGE ELECTRONIC REGISTRATION SYSTEMS, Inc. is the current holder and owner of the Note and Deed of Trust in question.”

NO. THERE’S NO LIFE AT MERS

Aside from not recording assignments, Mr. Arnold failed to mention that the certifying officers given authority to execute sensitive loan documents would not be paid employees of MERS. This raises the critical legal question as to how one can act as a certified officer and execute any equitable interest on behalf of any security instruments without being an employee of MERS.

On April 7, 2010, in the Superior Court of New Jersey, MERS Treasurer and Secretary William C. Hultman gave an oral sworn video/telephone deposition in the case of Bank Of New York v. Ukpe.:

Q Do the assistant secretaries — first off, are
you a salaried employee of MERS?
A No.

Q Are you a salaried employee of MERS Corp,
Inc.?
A Yes.

Q Are any of the employees of MERS, Inc.
salaried employees?
A I don’t understand your question.

Q Does anyone get a paycheck, if they are an
employee of MERS, Inc., do they get a paycheck from
Mercer, Inc.?
A There is no MERS, Inc.

Q I thought, sir, there’s a company that was
formed January 1, 1999, Mortgage Electronic Registration
Systems, Inc. Does it have paid employees?
A No, it does not.

Q Does it have employees?
A No.

Q Does MERS have any employees?
A Did they ever have any? I couldn’t hear you.

Q Does MERS have any employees currently?
A No.

Q In the last five years has MERS had any
employees?
A No.

<SNIP>

Q How many assistant secretaries have you
appointed pursuant to the April 9, 1998 resolution; how
many assistant secretaries of MERS have you appointed?
A I don’t know that number.

Q Approximately?
A I wouldn’t even begin to be able to tell you
right now.

Q Is it in the thousands?
A Yes.

Q Have you been doing this all around the
country in every state in the country?
A Yes.

Q And all these officers I understand are unpaid
officers of MERS?
A Yes.

Q And there’s no live person who is an employee
of MERS that they report to, is that correct, who is an employee?
A There are no employees of MERS.

If so, how does anyone have any authority to sign security instruments encumbered by any loan documents, if these certifying officers are not paid employees and never attend corporate meetings in the capacity as Vice President, Assistant Secretary, etc. with Mortgage Electronic Registration System, Inc.?

COURTS FIND ISSUES WITH MERS

Federal and state judges across America are realizing that the mortgage industry’s nominee is backfiring.

Wed, 07/06/2011 - 19:53 | 1431282 bill1102inf
bill1102inf's picture

LOL!

Wed, 07/06/2011 - 19:34 | 1431239 Printfaster
Printfaster's picture

LPS cannot go under or the Fed goes under and the whole home mortgage industry goes under.

Follow the chain.  LPS is like AIG:  Neither can go under.

TITF (too important to fail)

Look for force majeur to save LPS.

Wed, 07/06/2011 - 19:40 | 1431255 TruthInSunshine
TruthInSunshine's picture

Force majeure is not a viable position, IMO, unless courts literally gut the 10th Amendment.

The violation, on so many levels, and in so many incredible ways, of basic real property, title laws, recording statutes and a myriad of other bedrock common law, was knowing, voluntary and even intentional (look at the 'title shops' that were set up and hired by banks, investors and others to try and "re-create" the chain of title).

 

Force Majeure

Force Majeure literally means "greater force". These clauses excuse a party from liability if some unforseen event beyond the control of that party prevents it from performing its obligations under the contract. Typically, force majeure clauses cover natural disasters or other "Acts of God", war, or the failure of third parties--such as suppliers and subcontractors--to perform their obligations to the contracting party. It is important to remember that force majeure clauses are intended to excuse a party only if the failure to perform could not be avoided by the exercise of due care by that party.

Wed, 07/06/2011 - 20:35 | 1431365 Printfaster
Printfaster's picture

"IMO, unless courts literally gut the 10th Amendment."

The 10th amendment has not been invoked in any supreme court case in recent memory.

The 14th tossed that into the dumpster.

Never mind that, almost all home loans were under FHA, Fannie, Freddie, GNMA or GI.  Where does the state government have any say in those loans?  Never mind that we are talking only about federally chartered banks.  Do you see any state chartered banks involved?

Face it.  The housing and mortgage industries will not be allowed to disappear.  We are not talking about a major bank here.  We are talking about what holds all mortgage assets together

What this is, is an opportunity for rampant speculation and stock pumping, dumping, pimping, pillaging and raping.

Wed, 07/06/2011 - 22:34 | 1431554 disabledvet
disabledvet's picture

so the Fed's will declare "force majeure" in the PROPERTY market?  when last i checked stealing property was still illegal in the USA.  only states can legislate in this sphere--and i cannot forsee the Supreme Court determining otherwise.

Wed, 07/06/2011 - 23:43 | 1431668 Printfaster
Printfaster's picture

You are joking, right?

The federal government holds or guarantees virtually every home mortgage in the USA, jumbos notwithstanding.  The federal government is going to let state courts and legislatures have any say?  No.

Thu, 07/07/2011 - 00:25 | 1431713 TruthInSunshine
TruthInSunshine's picture

 

Yes, Freddie, Fannie & FHA/HUD are essentially BACKING/INSURING 90% of mortgages right now, which gives confidence (in a shitty market) to what few loan originators are making mortgage loans to do so - but this number does not imply outright ownership, ultimately (though it could if things materially worsen, which is why many in Congress are planning on imploding GSEs like Freddie and Fannie, if they could only muster the intellectual mustard seed-sized capacity to lay the plan out).

So, Freddie & Fannie are GSEs, and technically not part of the U.S. Government, though I suppose a case could be made that they'd be bailed out (they already have been...soooo...)....and we all know that GS & JPM are (allegedly) not part of the gov't, and they were bailed out (and on an umbilical cord which feeds them taxdollars continuously).

But big changes are underway, in reality.

 

Goodbye to Fannie and Freddie

 

Fannie Mae and Freddie Mac Own $24B - Total Mortgage Services, LLC 200k limit on FHA Mortgages: GW Economists Recommend Reducing FHA Loan Limits

 

As far as force majeure, it won't and can't be invoked in what is essentially a contract/real property circumstance, to avoid the application of black letter law, under present circumstances.

If I agree to sell you oil, and a war breaks out whereby the Straits of Hormuz are closed, or other geopolitically critical oil supplies become unavailable at any price, and I can't procure the oil I agreed to sell to you when our contract was formed, force majeure is an appropriate and equitable doctrine to invoke to allow the contract to be nullified.

How is force majeure relevant to broken chains of title caused by a knowing, voluntary and absolutely non-conforming (i.e. illegal) ostensible transfer of title to real property via the use of legal artifices such as MERS, et al., all done at the behest of the Mortgage Brokers Association, NAR, GSEs such as Freddie and Fannie, and most importantly, Wall Street Banks that demanded as much MBS from the 'Ventura, Cali' title shops during the boom days of housing, so they could sell MBS pools across the globe for epic amounts of money, banking epic profits (even though much of the 'transfer of title' was void due to clearly illegal methods of transfer and recordation)?

Thu, 07/07/2011 - 13:45 | 1433235 Printfaster
Printfaster's picture

Here is your answer.  Obama:  We didn't intervene enough in the housing markets.

http://hotair.com/archives/2011/07/07/obama-we-didnt-intervene-enough-in...

Wed, 07/06/2011 - 21:10 | 1431419 chunga
chunga's picture

Behind the curtain...these monsters are eating each other alive.

Time to drive a wooden stake into these bastards and be finished with them.

Wed, 07/06/2011 - 21:54 | 1431508 uOptOut
uOptOut's picture

Bye, Bye LPS. Sorry to have known you.
Long live OrderData!
That robosign was a great feature of ELS.

Wed, 07/06/2011 - 22:23 | 1431530 PulauHantu29
PulauHantu29's picture

He'll probably buy a Multi-Million dollar McMansion next to Mozillo in Bermuda...retire in Style....Life of Riley.......

I read somewhere the number of title closing defects was over 75% in 2005 and 2006 but have not heard much since. I do remember buying RE in the RE Bubble in 1988 (right before THAT RE and Bank crash) but did not learn the problem until about 10 years later when I went to sell. I suspect we will see there "title defects" popping up soon but now everyone is absorbed by the ubiquitous Fraudclosure Scams.

Even now, titles are all screwed up with sellers suing the buyers for their house back because of a "defect."

Buyer Beware.....GL!

 

Thu, 07/07/2011 - 08:13 | 1431981 chunga
chunga's picture

No doubt Carbiener's medical problems will manifest into an inability to talk - along with complete memory loss.

While LPS subsidiary, DocX may be dead, it's other various enterprises live on Clerk of Court servers all over the country with catchy names like "Aptitude Solutions".

Last year Docx amazing price sheet became availabe. One of their innovative services would be their ability to "Recreate Entire Collateral File" for under 100 bucks! What a bargain!

Do NOT follow this link or you will be banned from the site!