Our short, Lender Processing Services, i…
Our short, Lender Processing Services, is in the news again. And not for being a good citizen…From NakedCapitalism:
FDIC Filed Suit Against Lender Processing Services for $154 Million
Ooh, this is getting fun. Peter W found this tidbit in the May 10 Lender Processing Services 8K:
The Federal Deposit Insurance Corporation, in its capacity as Receiver for Washington Mutual Bank, filed a complaint on May 9, in the U.S. District Court for the Central District of California to recover alleged losses of approximately $154,519,000. The FDIC contends these losses were a direct and proximate result of the defendants’ alleged breach of contract with WAMU and alleged gross negligence of the defendants with respect to the provision of certain services by LPS’s subsidiary LSI Appraisal, an appraisal management company. In particular, the FDIC claims that the services provided failed to conform with federal and state law, regulatory guidelines and other industry standards, including specifically the provisions of the Uniform Standards of Professional Appraisal Practice. LPS previously described the possibility of this suit in its Form 10-Q filed May 5. In its complaint, the FDIC cites, as the cause of the damages claimed, 220 appraisals performed between June 2006 and May 2008. However, for more than 75% of the appraisals identified by the FDIC, LSI was contracted only to provide reviews of appraisals, not to conduct the initial, full appraisals. For these properties, the full appraisals were provided by other entities, unrelated to LSI. For all appraisals subject to this complaint, LPS believes there is no basis for a claim that LSI engaged in “gross negligence” or breach of contract related to these appraisal services.
Let us state the obvious: LPS is not set up to do anything on a one-off basis. If the FDIC’s case pans out with WaMu, you can rest assured that other parties have grounds for similar litigation.