COPPELL, Texas, Aug. 23, 2011 /PRNewswire/ -- American Home Mortgage Servicing, Inc. (AHMSI) today announced that it has filed a lawsuit against Lender Processing Services, Inc. (LPS) and its affiliate, DocX, LLC (DocX), seeking redress for the millions of dollars in losses that AHMSI has suffered, and continues to suffer, as a result of LPS and DocX's improper execution, notarization, and recording of assignments of mortgage affecting more than 30,000 residential mortgages across the country.

The lawsuit, filed today in District Court in Dallas County, Texas, follows AHMSI's unsuccessful attempt to recover its losses during more than a year of discussion among the parties.

The AHMSI lawsuit seeks:

1. a declaratory judgment that the contract between the parties, as amended, is binding and effective;
2. an order compelling defendants to arbitrate AHMSI's claims for breach of contract and indemnification; and
3. an award of damages relating to non-arbitrable claims sufficient to reimburse AHMSI for the millions of dollars in losses stemming from defendants executing, notarizing, and recording improper assignments on behalf of AHMSI.

DocX prepared, executed and recorded lien releases, assignments of mortgage and related documents for AHMSI from April 2008 through November 2009.  During this time certain DocX and LPS employees were duly appointed by AHMSI's board of directors as "Special Officers" of AHMSI, with powers limited to executing mortgage-related documents.  However, in late November 2009, LPS informed AHMSI that from March 2009 through October 2009, a substantial number of assignments of mortgage were executed by "surrogate signers," that is, by individuals who were not designated as Special Officers, but who signed in the name of one or more of the designated Special Officers. At no time did AHMSI sanction or know of the "surrogate signing" practices of LPS and DocX.  

Jordan Dorchuck, chief legal officer - AHMSI, said, "Upon learning of this unauthorized use of surrogates, we terminated the services of DocX and promptly conducted an extensive, 50-state remediation effort to address any issues caused by this problem.  Our remediation efforts are, and have been, focused on correcting affected assignments of mortgage to ensure they comply with all local, state and federal laws. This has been a vast undertaking, necessitating coordination with local counsel in each state."  

Based in Coppell, Texas, AHMSI is the 15th largest mortgage servicer in the country, managing nearly $72.5 billion in loan servicing, representing approximately 384,000 customers. Since its inception in April 2008, AHMSI has modified over 175,000 mortgage loans, including over 27,000 under the U.S. government's Home Affordable Modification Program (HAMP). AHMSI's more than 3,000 associates work each day with the mission of helping families preserve their dream of home ownership. AHMSI is a privately-held company owned by equity funds managed by WL Ross & Co., a financial management company with over $8 billion in assets under management.

SOURCE American Home Mortgage Servicing, Inc.