Michigan AG Bill Schuette says the former president of mortgage document processor DocX, pleaded guilty to racketeering for her alleged role in authorizing fraudulent signatures on mortgage documents.
Lorraine Brown pleaded guilty today to one count of conducting criminal enterprises, a 20-year felony, before Kent County Circuit Court Judge Mark Trusock.
The guilty plea follows an investigation into mortgage documentation filed with Michigan's Register of Deeds offices during the foreclosure crisis.
"Shortcuts like robo-signing are just one part of the mortgage foreclosure crisis," said Schuette. "The message here is clear – if you break the law, there are consequences. We will continue to prosecute criminals who target and exploit Michigan homeowners."
In April 2011, Schuette launched an investigation after state officials reported that they suspected documents filed in their offices may have been forged.
A "60 Minutes" news broadcast had shown that the name "Linda Green" was signed to thousands of mortgage-related documents nationwide, but with many different variations in handwriting.
County officials in Michigan reviewed files after and found similar documents that raised questions about authenticity.
Schuette's office reviewed the documents prepared by DocX, a document processing company located in Georgia.
DocX processed mortgage assignments and lien releases for residential lenders and servicers nationwide.
The investigation revealed that former DocX president Lorraine Brown, 51, of Alpharetta, Georgia, allegedly established and orchestrated the widespread scheme of "robo-signing," a practice in which employees were directed to fraudulently sign another authorized person’s name on mortgage documents in order to move documents quickly.
DocX called this practice "facsimile signing" or "surrogate signing."
Schuette’s investigation revealed that more than 1,000 unauthorized and improperly executed documents were filed throughout Michigan.
In addition to the criminal charge brought against Brown, Schuette announced on January 31, 2013 that he had reached a $2.5 million civil settlement with Lender Processing Services, Inc., the parent company of the now defunct DocX.
The settlement funds will go to the State of Michigan, and the legislature will decide how they will be spent.
Affected consumers will have their documents corrected by LPS.
Earlier this year, Schuette joined 48 other attorney generals in entering into a settlement with the five leading bank mortgage servicers.
The settlement addresses allegations of faulty foreclosure processes and poor servicing of mortgages that harmed Michigan homeowners.
The settlement also requires comprehensive reforms of mortgage loan servicing to improve customer service for Michigan borrowers.
More information on the 2012 Mortgage Settlement is available on the Attorney General’s Website at www.michigan.gov/mortgagesettlement.
Brown will return for sentencing on May 2.