What’s In A Name? Just Ask Black Knight!

“Black Knight” –  The black knight is a literary s
tock character, often contrasted with the knight-errant; also see white knight.  The character famously appeared in Arthurian literature and has been adapted and adopted by various authors, in cinema and popular culture. The character is sometimes associated with death. Wikipedia  [Underscore mine. ~PCQ]

“Sometime associated with death”?!  What self-respecting company would ever choose a name that’s “sometimes associated with death?  Was “Grim Reaper Inc.” already taken?

Believe it or not, there is a company that has embraced the name “Black Knight.” Here’s how they describe themselves on their website here:

United in Excellence

Black Knight is the premier provider of integrated technology, services, data and analytics that lenders and servicers look to first to help successfully manage the entire loan life cycle. Our deep understanding of regulatory and compliance issues complements the knowledge, technology and solutions we offer to help our clients achieve their business goals. [Underscore mine. ~PCQ]

Hmmm. You don’t suppose that Black Knight’s “deep understanding of regulatory and compliance issues” came from prowling the dark side of the streets? This sounds  eerily reminiscent of another perp from the early years of the foreclosure crisis.  Digging a bit deeper, one sees that Black Knight is the new name for a financial services company formerly known as “Lender Processing Services”, or “LPS.”  Here’s how LPS describes itself on their website here:

Throughout 50 years of commitment to the financial services community, LPS has built an enviable reputation for unmatched innovation on a solid foundation of trust. [Underscores mine. ~PCQ]

Gosh, with an “enviable reputation,” why would they change their name – especially to one “associated with death”?  Many folks who change their name do so to escape their past. But if their reputation was as stellar as their self-promotion implies, one would think LPS would want to embrace their illustrious past – not run from it.  There must be more to this story!

The Back Story. Actually, anyone who has watched the machinations of LPS during the foreclosure crisis years, knows only too well that the company was actually the poster child for evil incarnate. Now, it seems, the company’s blatant, bold and brazen activities have recently come home to roost.  Let’s take a short stroll through the Rogue’s Gallery of Miscreants and revisit some of the activities that LPS apparently believes made its reputation so “enviable.”

From Bloomberg.com, December 20, 2013:  

Lender Processing Services Inc. (LPS)is in talks with regulators that could lead to a settlement of more than $200 million over improper and fraudulent foreclosure paperwork after the 2008 credit crisis, according to people briefed on the discussions.

The deal would resolve claims that LPS falsified documents related to home seizures, including through “robo-signing.” The Federal Reserve, Federal Deposit Insurance Corp. and Office of the Comptroller of the Currency have discussed directing at least some of the money to homeowners, said two people who spoke on condition of anonymity because the matter is private.

From the U.S. Justice Department, Office of Public Affairs, February 15, 2013:

Lender Processing Services Inc. (LPS), a publicly traded mortgage servicing company based in Jacksonville, Fla., has agreed to pay $35 million in criminal penalties and forfeiture to address its participation in a six-year scheme to prepare and file more than 1 million fraudulently signed and notarized mortgage-related documents with property recorders’ offices throughout the United States.   The settlement, which follows a felony guilty plea from the chief executive officer of wholly owned LPS subsidiary DocX LLC, was announced today by Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division and U.S. Attorney for the Middle District of Florida Robert E. O’Neill.


According to the statement of facts accompanying the agreement, before its wind-down, DocX was in the business of assisting residential mortgage servicers with creating and executing mortgage-related documents to be filed with property recorders’ offices throughout the United States.   Employees of DocX, at the direction of Brown [the CEO – PCQ] and others, falsified signatures on the documents.   Through this scheme and unbeknownst to the clients, Brown and subordinates at DocX directed authorized signers to allow other, unauthorized personnel to sign and to have documents notarized as if they were executed by authorized signers.   These signing practices were used at DocX from at least March 2003 until late 2009, and were implemented to increase profits.

Also to increase profits, Brown hired temporary workers to sign as authorized signers.   These temporary employees would sign mortgage-related documents at a much lower cost and without the quality controls represented to clients.   These documents were then falsely notarized by employees at DocX, allowing the fraud scheme to remain undetected.

From the Washington State Attorney General’s Office, January 31, 2013:

As part of the ongoing effort to address the national foreclosure crisis, Attorney General Bob Ferguson today announced his office, 44 other Attorneys General and the District of Columbia have reached a $120 million multi-state settlement with Lender Processing Services, Inc. (LPS) and its subsidiaries, LPS Default Solutions and DocX.  The office also settled with LPS-subsidiary, LSI Title, for activities as a foreclosure trustee in Washington.

From the Consent Decree Judgment, here, I’ve culled a sampling of the facts LPS agreed occurred on its watch from at least January 1, 2008, to December 31, 2010.  The “Servicers” referred to in the Judgment were the Big Bank clients of LPS.

Some Mortgage Loan Documents generated and/or executed by certain subsidiaries of Lender Processing Services, Inc., on behalf of Servicers contain defects including, but not limited to, unauthorized signatures, improper notarizations, or attestations of facts not personally known to or verified by the affiant.

Some of these Mortgage Loan Documents may contain unauthorized signatures or may contain inaccurate information relating to the identity, location, or legal authority of the signatory, assignee, or beneficiary or to the effective date of the assignment.

Certain subsidiaries of Lender Processing Services, Inc., recorded or caused to be recorded Mortgage Loan Documents with these defects in local land records offices or executed or facilitated execution on behalf of the Servicers knowing some of these Mortgage Loan Documents would be filed in state courts or used to comply with statutory, nonjudicial foreclosure processes.

At some time prior to November 1, 2009, employees and agents of DocX, LLC (“DocX”) a wholly owned, indirect subsidiary of Lender Processing Services, Inc., were directed by management of DocX to initiate and implement a program under which some DocX employees signed Mortgage Loan Documents in the name of other DocX employees, who were or had been at one time authorized to sign on behalf of Servicers. DocX referred to these unauthorized signers as “Surrogate Signers.”

The Name Game.  Now it all makes sense! No wonder LPS decided to take on a new name associated with death – they had just survived a near death experience themselves!  Besides, they couldn’t – with a straight face anyway – call themselves “White Knight,” conjuring up images of chivalry, Sir Lancelot, Guinevere, and all that glamorous stuff.  So why not choose a name more closely aligned with the dark underbelly of the financial services industry?  Anyway, there’s not much glamor in analytics, number crunching, bean counting, and strong-armed debt collecting; it’s not like they needed a professional “stuffed-shirt” name. No, they want the appearance of “muscle.” An effete name would send the wrong message; when it comes to borrower defaults, Black Knight’s Big Bank clients probably want a doppelgänger just like themselves, but with a fearsome “take no prisoners” name.

Old Wine In New Bottles?  Let’s go back to Black Knight’s puff piece promotional piece posted at their website here.  I suspect that the person who wrote the following line was wearing a slightly crooked smile as he/she penned the following:

Our deep understanding of regulatory and compliance issues complements the knowledge, technology and solutions we offer to help our clients achieve their business goals.  [Underscore mine. ~PCQ]

Hmmm.  Well, who best to advise about cracking safes than than an experienced safecracker?  Same with hackers, con men, and other assorted scoundrels.  But can you trust Black Knight today to comply with the laws they ignored using another name? Keep in mind that they brag that they have a “deep understanding of regulatory and compliance issues” – they don’t say they have a “deep respect” for them.  So, that’s what remains to be seen: Has Black Knight née LPS –  despite the odd choice of name, had an epiphany, like Paul on the road to Damascus?

Conclusion.  Wouldn’t it be something if the average person who went through the legal wringer like LPS has experienced, could blithely change their name and continue their relationships as if nothing had happened?  In most cases, once a person, especially a public figure, gains huge negative notoriety, they become a pariah, shunned by fans, clients, and customers alike. Think: Lance Armstrong. After he admitted doping, sponsors and supporters couldn’t get away from him fast enough. Even Tiger Woods had to endure a year sitting in the Vice Principal’s office, mulling over his misdeeds.

So why is it that the Big Banks still use Black Knight for much of their financial servicing business, with full knowledge of its sordid past?  Easy Answer: They are all birds of a feather – to be specific, vultures. What Black Knight as “LPS” did for which it has paid millions, if not billions in fines, was for its Big Banks clients – so they could foreclose folks out of their home faster [and in the words of the US Justice Department’s February 15, 2013 press release, so LPS could “increase profits”]. Paying big fines and getting threatened with criminal prosecution by the feds, gives Black Knight “street cred.”  This is exactly who the Big Banks feel comfortable working with – one of their own.[1]  Remember, the Sopranos even welcomed back Richie Aprile Sr. when he got out of the Big House – at least for a while….

[1] Take a look at Market Watch’s posting of the top ten list of companies with the worst reputations. Six are in the financial services industry, i.e. Big Banks [plus AIG, the insurance conglomerate]. According to the article “24/7 Wall Street reviewed Harris Interactive’s 14th annual Reputation Quotient survey, which rated 60 large American companies based on six key characteristics including product quality, trust, social responsibility and how employees are treated. There are six financial services companies among the 10 companies with the worst reputations. Unlike tech companies, which consumers expect to take risks, these companies earn their respect from being safe and stable.”