The Market Ticker – LPS: Now We’re Cooking!

Reuters is out with a nasty article on the company (<– a must read in its entirety) which basically claims that the firm lied on it’s conference call!

Still, Carbiener told the Wall Street analysts in an October 29 conference call that LPS’s legal concerns were overblown, and the stock has jumped 13 percent since its close the day before the call.

But a Reuters investigation shows that LPS’s legal woes are more serious than he let on. Public records reveal that the company’s LPS Default Solutions unit produced documents of dubious authenticity in far larger quantities than it has disclosed, and over a much longer timespan.

Paging Mr. Sarbanes and Mr. Oxley on Line 1.  Mr. Sarbanes, you’re urgently wanted on Line #1.

This looked like, originally, yet another part of the Robosigning thing.  But now we have this:

Interviews with key players and court records also show that pending investigations and lawsuits pose a bigger threat to the company than Carbiener let on.

The criminal investigation in Jacksonville by federal prosecutors and the Federal Bureau of Investigation is intensifying. The same goes for a separate inquiry by the Florida attorney general’s office. Individuals with direct knowledge of the federal inquiry said that prosecutors have impaneled a grand jury, begun calling witnesses and subpoenaed records from LPS.

A Grand Jury?  That, to the best of my knowledge, hasn’t been disclosed by the company!

And here, again, is the root of the problem:

Without someone to draw up replacement documents, though, LPS’s clients faced potential hardship, because so many mortgages were never assigned by lenders, as required, in the first place. Without these documents, thousands of foreclosures all over the country would come to a halt.

Oh, it’s not just foreclosures.  If the notes were never assigned by lenders as required in the first place to the trusts then the Trusts have nothing, the so-called “Mortgage-Backed Securities” have no mortgages in them, the buyers of said securities were sold an empty box and the originator was paid in full and thus can’t foreclose either!

The “real issue” here is simply this: There may well be millions of investors, including pension funds, banks and individuals, who bought these instruments in good faith predicated on the representations in the PSAs, which I noted in my earlier Ticker, that in fact are false.

Anyone who had their fingers in that pie in any meaningful form, and especially anyone who was involved in covering up what happened, might be in for a very, very bad time.

This bears watching.

Disclosure: The author owns PUTs on LPS.

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