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January 21, 2013

Southern register seeks $1.3M restitution

An Essex County register of deeds has filed for $1.3 million in restitution to clean up thousands of potentially invalid property documents affecting more than 9,500 pieces of property following the guilty plea of the owner of a reputed “robosigner” company.

John L. O’Brien, register of deeds for the Southern District of Essex County, said the filings of DocX, a Georgia-based company that created and signed mortgage and lien transfer documents for large banks and mortgage lenders nationwide, are all in doubt after DocX founder and chief executive Lorraine Brown pleaded guilty in November to federal fraud charges in Florida.

“DocX was used by big banks to create fraudulent documents in mortgages. That’s what it did,” said Kevin Harvey, the first assistant registrar in the southern district. “Anything filed by DocX is tainted by anything that Lorraine Brown said in her plea.”

Paul Iannuccillo, the newly-elected register of deeds for the Northern District of Essex County, said he does not think he could file something similar because his office has not done the forensic investigations of documents and could not be specific enough about the problem.

“In general I support what he’s doing,” said Iannuccillo. “I think it’s a great idea.”

Harvey said the southern district office, which covers all of Essex County except for Lawrence, Andover, Methuen and North Andover, so far has identified 10,567 documents filed by DocX between 1998 to 2011, all of which the registry considers suspect.

Additionally, a 2011 forensic audit of all documents filed in 2010 “indicates that such corruption must necessarily extend well beyond the 10,567 admittedly or presumably false or fraudulent DocX/LPS documents that are at present recorded in the Southern Essex District,” O’Brien wrote in the federal court filing.

O’Brien said in the filing that a fraudulent document in a chain of title puts a cloud over every subsequent valid property document, and could complicate homeowners trying to sell their properties, refinance their mortgage or extract equity from their properties. Many of the documents are mortgage assignments, which declares the sale of a mortgage from one company to another.

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