LPS Complaint Summary (May 2011)

The Defendants 1. Kennedy- member of LPS B of Ds 2. Carbiener- President & CEO of LPS 3. Chan- Executive Vice President & CFO of LPS LPS Offices Headquarters- Jacksonville, Fl. primarily handles matters related to foreclosure, as well as some special assets LPS Default Solutions, Inc. subsidiary- Mendota Heights, MN. primarily handles bankruptcy matters LPS document solutions subsidiary (DocX, LLC)- Alpharetta, Georgia LPS Illicit Practices: Fabrication of documents robo-signing The forging of documents Improper notarization Violation of security protocols The concealment of known mistakes from courts, attorneys and clients When these problems were discovered by LPS internal auditors, LPS swept them under the rug LPS employees were rewarded for their speed, which resulted in violation of security protocols and significant errors in the services they were providing LPS stock price began to plummet in the fall of 2010.

LPS Network of attorneys LPS created a network of attorneys to help services its clients foreclosure cases. o In order to join the network, attorneys had to execute a Network Agreement with LPS o These network lawyers were required to pay referral fees to LPS as legal work was accomplished in the cases they were working on o LPS required its attorneys to follow specific timeframes o LPS strongly discouraged its attorneys from communicating with clients (E.R. 1.4Communication) o LPS managed the flow of information b/n attorneys and clients through its Desktop system- the work-flow processing web-based software application through which all atty.-client communications went through. o Network attorneys were kept in the dark by the limited information they received from LPS

LPS Complaint Summary (May 2011) o LPS ranked its attorneys through an internal metric know as Attorney Performance Review (APR), which ranked attorneys based on how quickly they performed work on behalf of servicers (possible breach of attorney-client privilege- E.R. 1.6) APR ratings were strictly based on speed. The LPS Desktop system assigns a color to each firm: green for firms that turn out the work the fastest, yellow for the slower ones and red for those that take the longest. Violation of 18 U.S.C. 155, the Bankruptcy Code and numerous professional responsibility codes In re Taylor, No. 07-15385 (Bankr. E.D. Pa. Apr. 15, 2009): Judge Sigmund stated that the barrier that NewTrak supplies to obstruct client/attorney communications is contrary to the Model Rules of Professional Conduct. Since there is no client consultation and since the lawyer is simply tasked to file a motion based on a pre-coded event or a claim objection based on a claim not filed by that firm, the Rules of Professional Conduct appear to have been subordinated to this automated system. The Network Firms were NOT independent. LPS had control over the attorneys Sharing legal fees with non-lawyers is illegal, and LPS is not a law firm.

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E.R. 1.5, Comment [5] provides that An agreement may not be made whose terms might induce the lawyer improperly to curtail services for the client or perform them in a way contrary to the clients interest. Violation of federal securities laws: LPS did not disseminate accurate and truthful information with respect to LPS financial condition and performance, growth, operations, financial statements, business, products, markets, management, earning, present and future business prospects, and to correct any previously issued statements. Substantive Allegations 1. LPS did not charge its clients (the mortgage servicers and banks that hire it to do foreclosure work) fees. 2. LPS gained revenues by charging referral fees (aka: administrative fees or administrative support fee) to attorneys in its Network and through illegal fee-splitting 3. Bill Newland: V.P. of Operations of LPS Default Solutions, who handles the atty. management area 4. According to Newland, these fees fund all of LPS Default Solutions activities, pay all of its overhead and comprise all of its profits. Confidential Witness Information: 5. CW 1: (a) Was the former Project Manager at LPS (b) Worked in Jacksonville headquarters from 11/2006-4/2010 (c) Reported to Bill Newland

LPS Complaint Summary (May 2011) (d) Stated that all the money comes from attorneys- no money comes from banks or servicers. (e) Believed that LPS received $200 per referral 6. CW 2: (a) The former Bankruptcy Specialist at LPS & worked in the MN. Office from 8/201011/2010 CW 3: the former REO Asset Manager at LPS from 8/2008-9/2009. CW 4: the former Financial Support Supervisor and worked in FL. Office from 8/2008-3/2010. CW 5: the former LPS Operations Specialist & Auditor, worked at FL. Office from 6/2009-8/2010. CW 6: the former DocX Customer Service Representative from 8/2006-5/2010 (footnote 23, p. 30) CW 7: the former DocX Data Entry Clerk from 4/2009-2/2010. (footnote 24, p. 30) CW 8: the former Member of the DocX Foreclosure Department, employed from 2006-4/2010. (footnote 26, p. 31); CW 8 pointed out to his supervisor that some documents were being released with bogus assignee or bogus assignor as the signatory. CW 8 was instructed to send out the documents even with the discrepancies, and that he should only worry about it if the documents were returned. CW 9: the former Client Care Services Manager, employed from 6/2008-9/2010; CW 9 confirmed the discrepancies in the assignment documents. CW 10: the former DocX Business Unit IT Executive, employed from 11/1994-10/2010. CW 11: the former Document Scanner, employed from 9/2006-2/2010. CW 12: the former Document Executioner, employed from 9/2006-4/2010. (footnote 30, p. 35) CW 13: the former Document Signer, employed from 3/2009-the end of 2009. CW 13 stated that employees would even come in on Saturdays to sign from 9:00pm to 6:00pm. CW 14: the former Source Document Specialist, employed from 2003-5/2010. (footnote 34, p. 39) CW 15: the former Sales Reporting Supervisor, employed from 5/2007-9/2010. (footnote 35, p. 44) CW 16: CW 16 explained that attorneys paid LPS for each process referral, such as the filing of Proof of Claim, a Motion for Relief, and Agreed Order, or other action by the attorneys. CW 17: The Assistant Operations Support Specialist, employed from 2/2009-5/2010. (footnote 37, p. 46)

7. 8. 9. 10. 11. 12.

13. 14. 15. 16. 17. 18. 19. 20. 21.

LPS fabricated missing assignments to foreclose on homeowners 22. With DocX, LPS produced significant numbers of invalid assignments on behalf of banks so that its client could foreclose on homeowners. 23. Services DocX offered for a fee: i) Create Lost Note Affidavit ii) Create Missing Intervening Assignment iii) Cure Defective Assignments iv) Recreate Entire Collateral File

LPS Complaint Summary (May 2011) 24. Data Entry employees did not perform any analysis or verify any information; they just pulled information from one screen and entered into another screen. 25. After data was entered, the documents were printed out and taken into the Signing Room (aka: the forging room) at DocX, where a supervisor took the documents and handed them out to signers. 26. Managers closed the door when clients came through so the clients would not see the signers. LPS abused client authority and required employees to Robo-Sign documents 1. CW 9 explained that there was a corporate resolution signed b/n DocX and their clients, giving DocX employees the authority to sign as a representative of the client, which was done solely to speed up the turnaround times of getting the documents completed and filed. 2. CW 12 stated that each signer received a batch of documents and had to sign whatever page they had in front of them, even if it was not their name on the page. These pages were signed without be read or analyzed beforehand. LPS requires employees to forge signatures through an arrangement called surrogate signing 1. Through this process, LPS required employees to sign or forge the names of those individuals at the Company who had been given signing authority by clients. 2. Whichever signature they could most closely emulate was the signature they were directed to sign, over and over again. 3. According to Chris Pendley, in an interview for 60 Minutes, he alone signed 4,000 documents a day and DocX employees had to sign at least 350 documents per hour. 4. Former LPS employee Cheryl Denise Thomas testified that she personally signed an assignment of mortgage as a V.P. for MERS, even though she was not a V.P. of MERS. 5. Employees were routinely assured that everything was above board and legal. 6. CW 12 explained that if you ever inquired as to the legality of the practice, you would be fired immediately. The Company Encourages Improper Notarization (p. 41) Company notaries would notarize documents, even though they never observed the actual signing nor verified the identity of the signer. Although DocX was shut down, illicit practices continued and were widespread LPS began shifting robo-signing operations to on-site client locations, where LPS signers and notaries continued to mass-produce the same type of deficient documents generated at DocX and LPS MN. The companys business model led to security breaches and significant errors Employees were pressured to share passwords Password sharing was widespread and constant LPS put intense pressure on employees to do work quickly, rather than accurately

LPS Complaint Summary (May 2011) LPS demanded mandatory overtime so that employees could process all loan files that needed attention Employees were often told by higher-ups that other people want your job, well just let you go if you dont keep up. LPS employees were only allowed to look at a file for 2 or 5 minutes, in order to maintain high levels of speed in relation to processing. phantom referrals went to attorneys who in turn would work on processes and file documents with courts alleging borrowers failures or defaults that were inaccurate (False statement to a tribunal and violation of E.R. 3.1: Meritorious Claims and Contentions) LPS files had numerous errors E.R. 7.3: Direct Contact with Prospective Clients A lawyer shall notsolicit professional employment from a prospective client or employ OR COMPENSATE ANOTHER to do so when a motive for the lawyers doing so is the lawyers pecuniary gain, unless the person contacted is a family member or has a close personal, or prior professional relationship with the lawyer. LPS concealed errors at any cost Default Management Services was a core operation of the company during the class periods Defendants were aware of the illicit practices at DocX Carbiener would visit the offices regularly with Chan, including the DocX office Defendants also repeatedly acknowledged the problematic business practices at DocX and their internal investigation of this entity. Defendants knew of the companys illicit practices from the constant media scrutiny, investigations, and litigation during the class period. DEFENDANTS FALSE AND MISLEADING CLASS PERIOD STATEMENTS As a result of Defendants misrepresentations, and resulting analyst affirmation, the Companys stock price climbed to an artificially inflated price. April 3rd, 2010- The Wall Street Journal Article Article entitled U.S. Probes Foreclosure-Data Provider When asked about problems with the Companys paperwork, LPS Kersch stated that unfortunately, on a few occasions, the document was inadvertently recorded before the field was updated. materially false and misleading April 5th, 2010 Press Release LPS assured the market that the services offered at its subsidiary were limited to a small number of customers, unrelated to the Companys core default management services, and that the Company had taken necessary remedial actions false and misleading May 14th, 2010- Florida Times Union Article

LPS Complaint Summary (May 2011) Article entitled Florida investigating bogus foreclosure records, it was reported that Floridas AG was investigating whether LPS was involved with forging real estate documents for foreclosure lawsuits Defendant Kersch said that LPS hasnt done anything wrong and would cooperate with any agency. She also said that DocX has no idea whether documents are being used in foreclosure suits and that the company just enters information into a standard form and has no independent discretion concerning the timing of the preparation of the document nor the information contained. false and misleading June 7th, 2010- National Mortgage News Article It was again reported that the Florida AGs office had launched a civil investigation implicating LPS in the use of fabricated documents in foreclosure cases THE TRUTH BEGINS TO EMERGE Beginning on April 16th, 2009, the market slowly began to learn the truth regarding the various illicit business practices that Defendants were engaged in to drive LPS revenue growth and market share. Rather than reveal the truth, Defendants repeatedly denied any wrongdoing and misled the market about the TRUE nature of the Companys business practices, their pervasiveness, the steps Defendants had taken to address those practices, and the impact of the illicit practice on the Companys financial condition. LPS stock began to drop when they continued to falsely reassure the market