The Beneficiaries of DocX Mortgage Assignments

December 21, 2012

This article was originally published in Lynn Szymoniak’s previous publication, ‘Fraud Digest,’ and is republished here as a resource for those interested in foreclosures and document fraud.

Fraud Digest, September 25, 2011

Docx, LLC, a small mortgage document company, operated quietly for many years in Alpharetta, Georgia.  In September, 2005, Fidelity National Financial, a Fortune 500 company, acquired Docx and the company’s operations and revenues quickly grew. By 2008, Docx employed about 75 employees, providing mortgage assignments, mortgage lien releases and affidavits used in foreclosure cases.

Fidelity “spun-off” its subsidiary, Lender Processing Services, Inc. (“LPS”), on July 3, 2008. The Docx operations as well as Fidelity’s document offices in Mendota Heights, Minnesota, became part of the new Lender Processing Services.

On April 2, 2010, the Wall Street Journal reported that federal prosecutors were conducting a criminal investigation of Docx. Shortly after this report, LPS closed the Docx operations in Alpharetta and made significant changes to the Mendota Heights operations.

Most of the controversy regarding LPS involved mass-produced mortgage assignments and affidavits that were used by banks in foreclosures and bankruptcies. Mortgage assignments from Docx emerged where the parties to the assignment were identified as “Bogus Assignee” or “A Bad Bene.”  On other assignments, blank lines were witnessed and notarized.  The effective date of transactions on other assignments was stated as 9/9/9999.

Most significantly, the signatures of the individuals claiming to be bank officers varied so significantly from document to documents that it was readily apparent that there was widespread forging of names.

In January and February, 2010, these Docx issues, including the forgeries, were reported by foreclosure defense attorneys and homeowners to the FDIC, the FBI, the Justice Department, the SEC, state attorneys general, the Financial Crisis Inquiry Commission, the House Financial Services Committee, county recorders, and other regulators and law enforcement agencies.

In May, 2010, Florida Attorney General Bill McCollum announced that his office was investigating LPS, as well as several of the nation’s largest foreclosure law firms.

By September, 2010, Washington Post reporters Ariana Eunjung Cha and Brady Dennis wrote an article about Docx titled, “Amid Mountain of Paperwork, Shortcuts and Forgeries Mar Foreclosure Process.” The article was accompanied by examples of “Linda Green’s Changing Signature.”

In October, 2010, the attorneys general of all 50 states announced that they were joining forced to conduct a multi-state investigation of mortgage servicing fraud and foreclosure fraud.  As of September, 2011, that effort was still ongoing.

In January, 2011, the Florida Attorney General’s office released a PowerPoint presentation setting out the many issues relating to foreclosure fraud.  This presentation also prominently featured the Docx assignments with the many different versions of the signatures of Linda Green, Tywanna Thomas, Korell Harp and other Docx employees.

The television news program, 60 Minutes, conducted its own investigation of Docx, and interviewed former employees for a segment that was aired in April, 2011.  Christopher Pendley, a former LPS employee, demonstrated how he forged the signature of another employee, Linda Green. Pendley stated that he and others at LPS  routinely forged signatures of Green and others.  Shawanna Crite, another LPS employee, stated that she and others routinely notarized documents with false signatures. Pendley signed over 4,000 documents each day.

On April 13, 2011, a Consent Order was entered against Lender Processing Services and Docx by the Board of Governors of the Federal Reserve, the Federal Deposit Insurance Corporation, the Office of the Comptroller of the Currency and the Office of Thrift Supervision.

The Consent Order spelled out the alleged violations by Docs and LPS:

WHEREAS, in providing document execution services to Examined Servicers, including services that facilitated completing foreclosures, LPS and its employees allegedly:

(a)    Executed numerous affidavits and similar sworn statements (collectively, “Affidavits”) making various assertions, such as the ownership of the mortgage note and mortgage (or deed of trust), the amount of principal and interest due, and the fees and expenses chargeable to the borrower, in which the affiant represented that the assertions in the Affidavit were made based on personal knowledge or based on a review by the affiant of the relevant books and records, when, in many cases, they were not based on such knowledge or review. LPS executed these Affidavits on behalf of Examined Servicers knowing they would be filed in state courts and in connection with bankruptcy proceedings in federal courts;

(b)    Executed assignments of mortgages containing inaccurate information pertaining to matters including the identity and location of the assignee and beneficiary and the effective date of the assignment. LPS recorded or caused to be recorded these assignments of mortgages in local land record offices, or executed them on behalf of Examined Servicers knowing they would be filed in state courts or in connection with bankruptcy proceedings in federal courts;

(c)     Executed Affidavits, assignments of mortgages, and other mortgage-related documents (collectively, “Mortgage Documents”) on behalf of Examined Servicers without authority to execute the Mortgage Documents, specifically without having been duly appointed as an agent or officer of the Examined Servicers to execute documents on behalf of the Examined Servicers;

(d)    Recorded or caused to be recorded in local land records offices numerous Mortgage Documents that were not properly notarized, including those not signed or affirmed in the presence of a notary, or knew that such Mortgage Documents would be filed in state and federal courts;

(e)    Failed to respond in a sufficient and timely manner to the increased level of foreclosures by increasing financial, staffing, and managerial resources to ensure that LPS adequately handled the document execution services that LPS provided to Examined Servicers; and

(f)     Failed to have adequate internal controls, policies and procedures, compliance, risk management, internal audit, and oversight of the document execution services that LPS provided to Examined Servicers.

Shortly after these Consent Orders by federal regulators, the Attorneys General of Michigan, Illinois, California and other states announced that they had issued subpoenas to Lender Processing Services and were conducting their own investigations of documents produced by the company.

After the 60 Minutes segment, several county recorders undertook their own investigations of forged and fraudulent mortgage documents in their counties. Jeff Thigpen, John O’Brien and Curtis Hertel, county recorders from Guilford County, NC, South Essex County, MA and Ingham County, MI, respectively, found widespread evidence of document fraud, related to Docx and other servicers, and made their findings public.

On August 23, 2011, mortgage servicer American Home Mortgage Servicing, Inc. (“AHMSI”) sued LPS in Dallas County, Texas, District Court for improper loan documents, including “surrogate-signed” mortgage assignments.

Similar to the county recorders’ studies and reports, this report examines the mortgage assignments prepared in Alpharetta, GA, and filed in Palm Beach County.  The findings are as follows:

 •   1,555 Docx mortgage assignments were filed in the official records of Palm Beach County, FL. These have been identified by book and page number.  (Only assignments that were notarized in Fulton County, GA, and that included the statement: “When Recorded Return to: Docx” in the upper left corner of the document were considered.)

•   The total value of the mortgages assigned on these 1,555 assignments is $497,589,152. (The average mortgage value was $________.)

•   The first Docx assignments were filed in Palm Beach County in July, 2008, and the last 4 Docx assignments were filed in early January, 2010.

The beneficiaries, or assignees, of these 1,555 Assignments were primarily banks, serving as trustees for various mortgage-backed trusts, and American Home Mortgage Servicing, Inc.  The Federal Home Loan Mortgage Corporation (“Freddie Mac”) was a beneficiary on 25 assignments. LaSalle Bank, which was acquired by Bank of America in 2007, was the beneficiary on 19 assignments.  Bank of America, Chase and IndyMac (now, One West) were not major users of Docx because they used their own mortgage servicing companies.

 

BENEFICIARIES OF DOCX MORTGAGE ASSIGNMENTS FILED IN PALM BEACH COUNTY, FL 

1.   Deutsche Bank National Trust Company

as Trustee for various mortgage-backed trusts: 611 Assignments

2.   American Home Mortgage Servicing: 316 Assignments

3.   Wells Fargo Bank

as Trustee for various mortgage-backed trusts: 283 Assignments

4.   U.S. Bank

as Trustee for various mortgage-backed trusts: 129 Assignments

5.   Citibank

as Trustee for various mortgage-backed trusts: 56 Assignments

6.   HSBC Bank

as Trustee for various mortgage-backed trusts: 51 Assignments

7.   Federal Home Loan Mortgage Corporation: 25 Assignments

8.   LaSalle Bank

as trustee for various mortgage-backed trusts: 18 Assignments

9.   Liquidation Properties: 13 Assignments

10. Mortgage Electronic Registration Systems: 13

11. JP Morgan Chase

as trustee for various trusts: 10 Assignments

12. Bank of New York

as trustee for various mortgage-backed trusts: 9 Assignments

13. Bank of America (not as trustee): 9 Assignments

14. HSBC Bank (not as trustee): 2

15. GMAC Mortgage: 2

16. American Home Mortgage Acceptance: 1

17. Citigroup Global Markets Realty: 1

18. Green Tree HE/HI Borrower, LLC: 1

19. LaSalle Bank (not as trustee): 1

20. MASTR Adj. Rate Mortgages Trust, 2007-1: 1

21. MERS, as Nominee: 1

22. Sand Canyon Corporation: 1

23. Saxon Mortgage Services: 1

There were 1,168 Docx assignments in Palm Beach County to mortgage-backed trusts. While these assignments were provided to several hundred distinct mortgage-backed trusts, the most frequent beneficiaries on the Docx trusts were American Home Mortgage (“AMH”) Assets Trusts and Investment Trusts, with 366 (31.3%)  assignments to these trusts.  Many of these trusts had mortgages with an initial aggregate value of over $1.5 billion.

Bank of New York, Citibank, Deutsche Bank National and U.S. Bank all serve as trustees for various AMH trusts, with Deutsche Bank serving as trustee for the majority of these trusts.

 

AMERICAN HOME MORTGAGE ASSETS TRUSTS & TRUSTEES

AHM Assets Trust, 2005-1 (Deutsche)

AHM Assets Trust, 2005-2 (Deutsche)

AHM Assets Trust, 2006-1 (Deutsche)

AHM Assets Trust, 2006-2 (Deutsche)

AHM Assets Trust, 2006-3 (Citibank)

AHM Assets Trust, 2006-4 (Citibank)

AHM Assets Trust, 2006-5 (Deutsche)

AHM Assets Trust, 2006-6 (Deutsche)

AHM Assets Trust, 2007-1 (Deutsche)

AHM Assets Trust, 2007-2 (Deutsche)

AHM Assets Trust, 2007-3 (Deutsche)

AHM Assets Trust, 2007-4 (Deutsche)

AHM Assets Trust, 2007-5 (Deutsche)

AHM Assets Trust, 2007-6 (Deutsche)

 

AMERICAN HOME MORTGAGE INVESTMENT TRUSTS & TRUSTEES

AHM Investment Trust, 2004-2 (Wells Fargo)

AHM Investment Trust, 2004-3 (Citibank)

AHM Investment Trust, 2004-4 (Bank of NY)

AHM Investment Trust, 2005-1 (Deutsche)

AHM Investment Trust, 2005-2 (Deutsche)

AHM Investment Trust, 2005-3 (Deutsche)

AHM Investment Trust, 2005-4 (U.S. Bank)

AHM Investment Trust, 2006-1 (Deutsche)

AHM Investment Trust, 2006-2 (Deutsche)

AHM Investment Trust, 2006-3 (Deutsche)

AHM Investment Trust, 2007-1 (Deutsche)

AHM Investment Trust, 2007-2 (Deutsche)

Prior to 2010, there were two major sets of assignments to these AHM trusts.  One set includes assignments that were notarized in Suffolk County, New York. American Home Mortgage is located in Melville, New York, in Suffolk County. These assignments are usually dated within a few days of the mortgage.  They are signed by individuals who are identified as officers of American Home Mortgage or one of its subsidiaries.  The beneficiary trusts on these assignments are almost always hand-written, indicating the assignments were most likely assignments in blank, with the name of the trust being inserted at the time the assignments were submitted for recording.

The Docx assignments, in contrast, were all notarized in Fulton County, GA, and dated in 2008 and 2009, years after the closing dates of the trusts.  They are signed by Docx employees, who are identified as officers of American Home Mortgage or its subsidiaries, American Home Mortgage Acceptance or American Brokers Conduit, or as officers of Mortgage Electronic Registration Systems, as nominee for American Home Mortgage and its subsidiaries.

At the time the Docx assignments to the American Home Mortgage trusts were being prepared, American Home Mortgage had filed for bankruptcy.  One explanation for these assignments is that the trustees and servicers were no longer able to get original documents from the bankrupt mortgage company and used Docx as replacements.  In January, 2011, Reuters reported that the liquidating trustee in the American Home Mortgage case asked Bankruptcy Judge Christopher Sontchi for permission to destroy 4,100 boxes of loan documents stored in a parking garage at American Home Mortgage’s former headquarters in Melville, New York.

Another explanation is that Lender Processing Services’ subsidiary, Default Solutions, directed foreclosure attorneys to use documents produced by its other subsidiaries, including Docx, to generate revenues.

Soundview Home Loan “OPT” Trusts were the second most frequent beneficiaries on the Docx assignments. There are 35 Soundview Home Loan Trusts, listed in the records of the Securities & Exchange Commission, with 14 designated as “OPT” trusts, indicating they were comprised primarily of loans from Option One Mortgage Corporation. Deutsche Bank and Wells Fargo Bank are the trustees for these 14 trusts. Of the 1,168 Docx assignments in Palm Beach County to mortgage-backed trusts, 161 (13.8%) were assignments to Soundview Home Loan “OPT” Trusts.

 

SOUNDVIEW HOME LOAN “OPT” TRUSTS AND TRUSTEES

Soundview Home Loan Trust, 2005-OPT1 (Deutsche)

Soundview Home Loan Trust, 2005-OPT2 (Deutsche)

Soundview Home Loan Trust, 2005-OPT3 (Deutsche)

Soundview Home Loan Trust, 2005-OPT4 (Deutsche)

Soundview Home Loan Trust, 2006-OPT1 (Deutsche)

Soundview Home Loan Trust, 2006-OPT2 (Deutsche)

Soundview Home Loan Trust, 2006-OPT3 (Deutsche)

Soundview Home Loan Trust, 2006-OPT4 (Deutsche)

Soundview Home Loan Trust, 2006-OPT5 (Deutsche)

Soundview Home Loan Trust, 2007-OPT1 (Wells Fargo)

Soundview Home Loan Trust, 2007-OPT2 (Wells Fargo)

Soundview Home Loan Trust, 2007-OPT3 (Wells Fargo)

Soundview Home Loan Trust, 2007-OPT4 (Wells Fargo)

Soundview Home Loan Trust, 2007-OPT5 (Wells Fargo)

Prior to 2010, there were three major sets of assignments to these Soundview  trusts.  One set includes assignments that were notarized in Orange County, California. Directly above the words “Assignment of Mortgage,” the following sentence appears: “This Instrument Prepared By: Option One Mortgage Corporation, A California Corporation  Address: 3 Ada, Irvine, CA  92618.”

These assignments are usually dated within a few weeks of the mortgage.  They are signed by individuals who are identified as officers of Option One Mortgage Corporation.  The beneficiary trusts on these assignments are almost always hand-written, indicating the assignments were most likely assignments in blank, with the name of the trust being inserted at the time the assignments were submitted for recording.

Another set of Soundview assignments were all notarized in Dakota County, Minnesota, by employees of FIS/LPS. These assignments all appear after December, 2007, when Option One Mortgage Corporation ceased operations.

The third set, the Docx assignments, were all notarized in Fulton County, GA, and dated in 2008 and 2009, years after the closing dates of the trusts.  They are signed by Docx employees, who are identified as officers of Option One Mortgage Corporation, or Sand Canyon Corporation, as successor-in-interest to Option One Mortgage Corporation or American Home Mortgage Servicing, as successor-in-interest to Option One Mortgage Corporation. These assignments all appear after December, 2007, when Option One Mortgage Corporation ceased operations.

Option One Mortgage Loan Trusts were the third most frequent beneficiaries on the Docx assignments.  Wells Fargo Bank is the trustee for each of these trusts, except for one that has HSBC Bank as trustee. Of the 1,168 Docx assignments in Palm Beach County to mortgage-backed trusts, 146 (12.5%) were assignments to Option One Mortgage Loan Trusts.

 

OPTION ONE MORTGAGE LOAN TRUSTS AND TRUSTEES

Option One Mortgage Loan Trust, 2003-1 (Wells Fargo)

Option One Mortgage Loan Trust, 2003-2 (Wells Fargo)

Option One Mortgage Loan Trust, 2003-3 (Wells Fargo)

Option One Mortgage Loan Trust, 2003-4 (Wells Fargo)

Option One Mortgage Loan Trust, 2004-1 (Wells Fargo)

Option One Mortgage Loan Trust, 2004-2 (Wells Fargo)

Option One Mortgage Loan Trust, 2004-3 (Wells Fargo)

Option One Mortgage Loan Trust, 2005-1 (Wells Fargo)

Option One Mortgage Loan Trust, 2005-2 (Wells Fargo)

Option One Mortgage Loan Trust, 2005-3 (Wells Fargo)

Option One Mortgage Loan Trust, 2005-4 (Wells Fargo)

Option One Mortgage Loan Trust, 2006-1 (Wells Fargo)

Option One Mortgage Loan Trust, 2006-2 (Wells Fargo)

Option One Mortgage Loan Trust, 2006-3 (Wells Fargo)

Option One Mortgage Loan Trust, 2007-1 (Wells Fargo)

Option One Mortgage Loan Trust, 2007-2 (Wells Fargo)

Option One Mortgage Loan Trust, 2007-3 (Wells Fargo)

Option One Mortgage Loan Trust, 2007-4 (Wells Fargo)

Option One Mortgage Loan Trust, 2007-5 (Wells Fargo)

Option One Mortgage Loan Trust, 2007-6 (Wells Fargo)

Option One Mortgage Loan Trust, 2007-CP1 (Wells Fargo)

Option One Mortgage Loan Trust, 2007-FXD1 (Wells Fargo)

Option One Mortgage Loan Trust, 2007-FXD2 (Wells Fargo)

Option One Mortgage Loan Trust, 2007-HL1 (HSBC)

Prior to 2010, there were two major sets of assignments to these OOMLT trusts.  One set includes assignments that were notarized in Orange County, California. Directly above the words “Assignment of Mortgage,” the following sentence appears: “This Instrument Prepared By: Option One Mortgage Corporation, A California Corporation  Address: 3 Ada, Irvine, CA  92618.”

These assignments are usually dated within a few weeks of the mortgage.  They are signed by individuals who are identified as officers of Option One Mortgage Corporation.  The beneficiary trusts on these assignments are almost always hand-written, indicating the assignments were most likely assignments in blank, with the name of the trust being inserted at the time the assignments were submitted for recording.

The Docx assignments, in contrast, were all notarized in Fulton County, GA, and dated in 2008 and 2009, years after the closing dates of the trusts.  They are signed by Docx employees, who are identified as officers of Option One Mortgage Corporation, or Sand Canyon Corporation, as successor-in-interest to Option One Mortgage Corporation or American Home Mortgage Servicing, as successor-in-interest to Option One Mortgage Corporation. These assignments all appear after December, 2007, when Option One Mortgage Corporation ceased operations.

HSI Asset Securitization Corporation’s “OPT” Trusts were the fourth most frequent beneficiaries on the Docx assignments. Deutsche Bank is the trustee for these 6 trusts. Of the 1,168 Docx assignments in Palm Beach County to mortgage-backed trusts, 38 (3.3%) were assignments to HSI Asset Securitization “OPT” Trusts.

 

HSI ASSET SECURITIZATION CORPORATION “OPT” TRUSTS AND TRUSTEES

HSI Asset Securitization Corp., 2005-OPT1 (Deutsche)

HSI Asset Securitization Corp., 2006-OPT1 (Deutsche)

HSI Asset Securitization Corp., 2006-OPT2 (Deutsche)

HSI Asset Securitization Corp., 2006-OPT3 (Deutsche)

HSI Asset Securitization Corp., 2006-OPT4 (Deutsche)

HSI Asset Securitization Corp., 2007-OPT1 (Deutsche)

 

American Home Mortgage Servicing, Inc. is the link among these trusts. In early 2008, AHMSI, then named American Home Mortgage Acquisition, acquired the servicing operations of American Home Mortgage for $435 million. On May 1, 2008, H&R Block sold the mortgage loan servicing business of Option One Mortgage Corporation to AHMSI for $1.3 billion. These acquisitions made AHMSI the second-largest subprime mortgage servicer in the country. On July 1, 2008, three months after the Option One closing, AHMSI greatly expanded the work given to Docx, under a 2006 contract between Docx and Option One in order to process the quickly expanding new operations. This was the same month that Lender Processing Services announced its new structure and operations.

As two residential mortgage giants, Option One and American Home, crashed, two servicers, AHMSI and LPS emerged. LPS reported 2009 revenues of $2.4 billion. According to a report from one major ratings company regarding AHMSI, “During this period of robust, acquisition-driven growth and the integration of platforms, American Home took extensive care and diligence to help avoid disruption, accommodate borrower needs, and minimize investor risk.”

From July, 2008, these two companies filed more mortgage documents with country recorders’ officers than any other companies in history. The volume of needed mortgage documents overwhelmed both companies, resulting in the filing of over two million erroneous mortgage documents, leaving county recorders, taxing authorities, investors, and homeowners with no confidence that an unbroken chain of home ownership can ever again be established.