Illinois accuses Nationwide Title Clearing of robosigning
The attorney general in Illinois on Thursday sued a mortgage document firm and said it filed "faulty" documents with local governments in a rush to process mortgages and foreclosures.
Nationwide Title Clearing Inc was a "key contributor" to the mortgage crisis by "undermining the integrity and accuracy of the mortgage servicing and foreclosure process," Attorney General Lisa Madigan said in a statement.
The Palm Harbor, Florida-based firm prepares documents for mortgage servicers to use against borrowers who are in default or foreclosure.
A spokeswoman for Nationwide Title said the firm had not yet seen the lawsuit.
The lawsuit comes as Illinois and other states are close to signing an agreement with five top U.S. banks to resolve allegations of mortgage servicing and foreclosure abuses.
Those negotiations began more than one year ago, after reports emerged that workers had "robo-signed," or signed without reading, thousands of pages of mortgage documents, which in some cases led to unlawful foreclosures.
That multistate settlement does not include contractors used by the banks in some of the questionable practices.
Nationwide Title works for eight of the 10 largest lenders and mortgage servicers, according to the lawsuit.
Its employees often signed documents as "vice president" of other companies, even though they were Nationwide Title workers, the lawsuit said.
Crystal Moore, for example, signed documents as a vice president of Citi Residential Lending Inc, even though she was an employee of National Title.
The employees sign a few thousand documents each day, and do not read and verify the documents they sign, according to the lawsuit.
The documents often include statements that the signatory has personal knowledge of the facts in the document, the lawsuit said.
The company is a "document production factory," Madigan said in the lawsuit.
The lawsuit, filed in Cook County Circuit Court, accuses the firm of violating the Illinois Consumer Fraud and Deceptive Practices Act and the Uniform Deceptive Trade Practices Act.
Through the lawsuit Madigan asked the court to require the firm to review and fix documents it unlawfully created and recorded, and pay back revenue and profit it gained through the practices.
The suit also seeks civil penalties of up to $50,000 per violation.
Madigan has stepped up her state's efforts to punish companies for what she views as their role in the 2007-2009 financial crisis.
She sued Standard & Poor's last week, for example, and said it fueled the nation's housing and financial crises by assigning inflated credit ratings to risky mortgage-backed securities.
Madigan also appeared with Attorney General Eric Holder and other top U.S. officials in Washington last week to announce a new federal-state working group that would investigate misconduct in the packaging and sale of home loans to investors.