Connecticut Attorney General's Office

Press Release

Attorney General Investigates Selection Process For Law Firms, Marshals Handling Foreclosures

June, 2009

Attorney General Richard Blumenthal, as part of an investigation into the foreclosure business in Connecticut, has requested information from mortgage giants Lender Processing Services, Inc., Freddie Mac and Fannie Mae concerning their process for selecting law firms in foreclosure proceedings.

Blumenthal is investigating reports that a majority of Connecticut foreclosures are assigned to only a few select law firms, and complaints by consumers who said they did not receive proper foreclosure notices from marshals.

In letters to Lender Processing Services, Inc., the Federal Home Loan Mortgage Corporation (Freddie Mac) and the Federal National Mortgage Association (Fannie Mae), Blumenthal said he understands that these organizations maintain a network of law firms that perform legal services relating to foreclosure actions.

Blumenthal has requested specific information related to the process in developing these networks and selecting law firms.

"Dominance over foreclosure service by a few select law firms and marshals has spurred complaints about improper or illegal practices -- wrongfully allocating work to non-marshals, forging papers, failing to serve papers, and making kickbacks," Blumenthal said. "Concentrating this work in a few hands can be severely problematic -- causing unconscionable costs and failed notice delivery. These companies -- mortgage lending giants -- have a public trust.

"A scarce few are spinning foreclosures into fortunes -- and perhaps deepening homeowner despair.

"As concentration in the foreclosure business has increased, so have consumer complaints, which have prompted my investigation. My office is investigating to ensure that competition is preserved, and consumers protected."

Blumenthal has requested that Lender Processing Services, Inc., Freddie Mac and Fannie Mae each provide the following information:

  • Identify all law firms in Connecticut who have provided them with legal services relating to foreclosure actions from 2007 to the present;

  • Identify the criteria utilized in selecting law firms to handle foreclosure work;

  • Identify the number of foreclosure actions filed from 2007 to present in Connecticut for which each enterprise has retained counsel;

  • Identify the Connecticut law firms used, and itemize all fees paid to such Connecticut law firms, from 2007 to the present;

  • Identify and itemize all fees paid to Lender Processing Services, Inc., Freddie Mac and Fannie Mae by Connecticut law firms from 2007 to the present;

  • Identify all policies and procedures required of Connecticut law firms to comply with the provision of legal services sought;

  • Identify any complaints received relating to Connecticut consumers who did not receive notice of a foreclosure action or default judgment in a foreclosure action;

  • Identify all lenders to whom default servicing is provided; and

  • Provide copies of all agreements with law firms, including fee schedules.

View the entire letter - (PDF-260KB)