Sen. Ron Wyden, D-Ore., is urging the Justice Department to investigate Lender Processing Services for double-billing of foreclosure-related legal fees.
LPS , a Jacksonville, Fla., mortgage-processing software firm, violated the False Claims Act by charging the legal fees to delinquent borrowers or mortgage investors, Wyden said in a four-page letter to Attorney General Eric Holder on Thursday. Borrowers had already paid servicing charges collected by Fannie Mae and Freddie Mac that covered the legal costs, he wrote.
"These fees are not delineated for borrowers, thus ensuring that they are unaware that they are being charged for a service that a portion of their interest payments already paid for," he wrote. "Instead, these borrowers are simply told that they need to come up with more money to save their homes."
"Under this arrangement, the more mortgages that fall into default … the more money LPS makes," he wrote.
Michelle Kersch, a spokeswoman for LPS, called Wyden's allegations "incorrect." Fifteen civil cases against LPS have been filed in federal and state courts over the last several years "based on the same failed allegations" and have all been dismissed, she said in an email.
"LPS does not charge or pass any fees along to borrowers," Kersch said. "Fees for use of LPS' technology and services are billed solely to, and paid directly by, attorneys, servicers and other parties who use those products. These fees are not billed to or recoverable from borrowers."
Wyden has asked Justice to review LPS' practices, including additional allegations that LPS "is tying the pricing of its [mortgage-servicing] and desktop platforms" to clients' purchases of title products and services.
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