Tracy Lawrence, a whistleblower who robo-signed tens of thousands of foreclosure documents and then aided the state of Nevada in their eventual indictments over the scheme, turned up dead yesterday:
NBC station KSNV of Las Vegas reported that the woman, Tracy Lawrence, 43, was scheduled to be sentenced Monday morning after she pleaded guilty this month to notarizing the signature of an individual not in her presence. She failed to show up for her hearing, and police found her body at her home later in the day.
It could not immediately be determined whether Lawrence, who faced up to one year in jail and a fine of up to $2,000, died of susicide or of natural causes, KSNV reported. ?Detectives said they had ruled out homicide.
Lawrence came forward earlier this month and blew the whistle on the operation, in which title officers Gary Trafford, 49, of Irvine, Calif., and Geraldine Sheppard, 62, of Santa Ana, Calif. — who worked for a Florida processing company used by most major banks to process repossessions — allegedly forged signatures on tens of thousands of default notices from 2005 to 2008.
Yves Smith has more. Lawrence worked for LPS, the foreclosure document processor. To say that this creates a chilling effect on other potential whistleblowers puts it mildly. And I don’t think we can simply chalk this up to a suicide to avoid prison, either.
These companies are obviously willing to play hardball. The very software they use to process mortgage payments is perpetuating foreclosures. LPS owns that software package and programmed it to apply payments at odds with the specifications of the mortgages.
Here’s how the fraud works: Mortgage loan notes are very clear on the schedule of how payments are to be applied. First, the money goes to interest, then principal, then all other fees. That means that investors get paid first and servicers, who collect late fees for themselves, get paid either when they collect the late fee from the debtor or from the liquidation of the foreclosure. And fees are supposed to be capitalized into the overall mortgage amount. If you are late one month, it isn’t supposed to push you into being late on all subsequent months.
The software, however, prioritizes servicer fees above the contractually required interest and principal to investors. This isn’t a one-off; it’s programmed. It’s the very definition of a conspiracy! Who knows how many people paid late and then were pushed into a spiral of fees that led into a foreclosure? It’s the perfect crime, and many of the victims had paid every single mortgage payment.
You can obviously see why LPS wouldn’t want anyone nosing around this programmatic (literally) fraud, or disrupting any other aspect of their criminal enterprise. And criminal enterprises have a history of using extreme prejudice to protect their operations, frequently making the incidents look like accidents or suicides.
Still, the initial reports state police have ruled out a homicide. Let’s hope there’s a thorough investigation.