U.S. District Court for the Central District of California Thursday dismissed a civil claim filed against Lender Processing Services (LPS) by the Federal Deposit Insurance Corp. (FDIC), which accused the mortgage vendor of gross negligence in appraisals conducted for the now defunct Washington Mutual, Seattle.
In May the FDIC, the receiver for WaMu, sued LPS, claiming the mega-thrift lost at least $154 million due to the vendor's behavior.
The lawsuit focused on 220 appraisals performed by LPS between June 2006 and May 2008.
Regulators charged that losses occurred because the appraisals “failed to conform with federal and state law, regulatory guidelines and other industry standards, including specifically the provisions of the Uniform Standards of Professional Appraisal Practice.”
Despite the court's ruling, the Jacksonville, Fla.-based LPS, is still liable for breach of contract allegations levied against it.
In a new Securities and Exchange Commission filing, LPS maintains that it is only liable for $10,000 on every claim based on the appraisal outsourcing agreement originally signed by the lender and LPS affiliate, LSI Appraisal.
“The company is confident that it will ultimately prevail on any remaining breach of contract claim,” LPS says in its 8-K filing.
The $307 billion asset WaMu, once a top ranked nonprime lender, failed in 2008. Most of the firm, but not all, was sold to JPMorgan Chase.
The FDIC also sued the Santa Ana-based CoreLogic for $129 million on the exact same charges, but the court has not yet ruled on the matter.