A federal criminal investigation of Lender Processing Services Inc.’s alleged involvement in robo-signing practices is gaining momentum, and evidence in several class-action lawsuits suggests the company faces greater legal exposure to the robo-signing scandal than it has acknowledged, Reuters reports.

But LPS — the data provider for the National Association of Realtors’ national property database, Realtors Property Resource — today issued a rebuttal to the "special report" published by Reuters Dec. 6, saying it was "extremely disappointed in the inaccurate and sensational article."

LPS acknowledged uncovering "deficiencies in practices that took place at a former business unit," DocX, in late 2009. But LPS says it shut down DocX and corrected errors in documents that DocX had prepared.

Reuters said it found evidence that questionable practices weren’t limited to its subsidiary, and that the company provided personnel to clients who worked in new signing operations after the federal investigation was launched.

The report also questioned LPS’ "unusual dealings" with a network of law firms that allegedly paid upfront fees to LPS when they agreed to represent lenders in foreclosure proceedings, and monthly fees for use of LPS’s Desktop system.

LPS allegedly rated law firms using a green, yellow and red system depending on how fast they accepted assignments and generated court filings, and that work was withheld from firms that didn’t respond quickly enough.

A criminal investigation by federal prosecutors and the Federal Bureau of Investigation is "intensifying," Reuters said, with prosecutors impaneling a grand jury, calling witnesses, and demanding records from LPS. The Florida Attorney General’s Office has a separate inquiry, Reuters reported.

LPS today issued a statement saying "no other LPS division utilized the signing practice identified at DocX."

After shutting down DocX, LPS "provided temporary notary support while clients resumed full responsibility for document execution," the company said.

Notaries furnished by LPS "performed the limited role required of these notaries, which was to verify the identity of the person signing a document and to notarize his or her signature," LPS said. "The LPS notaries did not sign documents nor did they oversee the process utilized by the signer to review documents before signing — including verification of the information contained in the document."

As for its relationships with the law firms that handle foreclosure proceedings for lenders and loan servicers who are clients of LPS, the company said LPS "does not not hire law firms. Servicers select the attorneys with whom they want to work, and the servicers direct them to use LPS’ technology if the servicers choose to use the LPS technology platform to assist them in their management of foreclosure matters."

It is loan servicers, not LPS, that establish the timeline for the steps required for an attorney to handle a foreclosure matter on their behalf, LPS said.

Performance metrics of law firms "are reported to the servicers who may or may not utilize the information in their decision to hire or retain attorneys," LPS said.

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