May 25, 2011 / 6:01 PM / in 7 years

UPDATE 2-U.S. mortgage servicers get subpoenas

* LPS and Nationwide Title Clearing probed by AGs

* Accused of “robosigning” mortgage documents

* Federal investigation continues (Updates stock price; adds background on LPS)

NEW YORK, May 25 (Reuters) - Attorneys general in California and Illinois have subpoenaed Lender Processing Services Inc LPS.N and Nationwide Title Clearing Inc as part of probes into alleged “robosigning” in the mortgage servicing industry.

The state investigations advance efforts by federal agencies underway since 2010.

California Attorney General Kamala Harris said in a statement on Wednesday that her office sent a subpoena to LPS. Illinois Attorney General Lisa Madigan said she issued subpoenas to both LPS and Nationwide Title Clearing Inc. The two offices are coordinating their investigations, according to a spokeswoman for Madigan.

LPS stock was up 22 cents at $25.56, or .9 percent, in late afternoon trading on the New York Stock Exchange. Earlier in the day, it had fallen more than 2 percent following the subpoena announcements.

Robosigning refers to the mass signing of documents by banks or mortgage servicing companies when they try to foreclose on borrowers. Harris and Madigan said the so-called robosigners did not read or understand the documents they signed.

LPS was used by many of the largest mortgage lenders and servicers in the country and former LPS employees have testified documents were robosigned, Harris said.

“California homeowners have been exposed to fraud and crime at every step of the mortgage process,” Harris said in a statement. “Justice demands we come to their aid and a key step in that is to investigate robosigning and the potential for inaccurate or unjust foreclosures.”

Telephone calls to LPS and Nationwide Title Clearing, both based in Florida, were not immediately returned.

LPS disclosed in an SEC filing in 2010 that it was under investigation by federal prosecutors in Florida looking into alleged forged signatures and other improprieties by DocX, a subsidiary LPS shut down in August 2010. That investigation is pending, according to individuals who have supplied information recently to prosecutors.

The lead regulator of national banks, the federal Office of the Comptroller of the Currency (OCC) joined other federal banking regulators in an examination of LPS in late 2010.

In April 2011, the OCC announced it reached a settlement with LPS -- along with other large banks that act as home loan servicers -- for improprieties in handling foreclosures. The settlement with LPS accused it of filing false affidavits in foreclosure cases, filing other inaccurate foreclosure-related documents in court and filing documents with county clerks’ offices that were not properly notarized. The settlement called for an internal investigation by LPS, a halt to any improper practices and remediation for any harm caused. LPS agreed to the settlement without admitting any wrongdoing.

Other federal agencies, including the Department of Housing and Urban Development, are continuing to investigate loan servicers, including LPS. (Reporting by Moira Herbst; additional reporting by Scot Paltrow and Andre Grenon)

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