CHARLESTON – Several state attorneys general are announcing the settlement of a multi-state investigation with Lender Processing Services and its subsidiaries, LPS Default Solutions and DocX.
The $127 million settlement was announced Jan. 31 and resolves allegations that LPS engaged in robo-signing and other improper mortgage loan default servicing conduct. Forty-six states, including West Virginia, signed the agreement.
“The mortgage crisis has affected far too many families. I am pleased that LPS is willing to enhance its practices to ensure all foreclosure proceedings are strictly followed,” state Attorney General Patrick Morrisey said.
Under the terms of the proposed settlement, LPS and its subsidiaries would be required to institute business practice reforms and correct documents it executed, if necessary.
The consent judgment would also prohibit signature by unauthorized employees or people without first-hand knowledge of facts stated in the documents, require enhanced oversight of provided default services, and require a review of all third-party fees to make sure that fees are reasonably and accurately earned.
If the settlement is accepted, LPS will review the documents it executed between Jan. 1, 2008, and Dec. 31, 2010, to determine if any documents must be re-executed or corrected. If authorized, LPS will make the corrections and periodically report to Delaney’s office about document review and/or modification status.
LPS is currently setting up a toll-free telephone line that consumers can use at any time to request correction and review of documents that LPS executed.
"Today's settlements are another major step toward putting issues related to past business practices behind us," LPS President and Chief Executive Officer Hugh Harris said.
"As LPS continues to grow and exercise its leadership in the mortgage industry, we remain committed to enhanced regulatory compliance and operational excellence, which are crucial in our changing industry."
As a result of the settlement and other litigation, LPS increased its legal and regulatory resolve at the end of 2012 by $48 million to a total of $223 million.
In May 2011, California Attorney General Kamala Harris and Illinois Attorney General Lisa Madigan subpoenaed the company to investigate claims of robo-signing, which involves signing documents used by mortgage servicing companies or banks to foreclose on borrowers without verifying their accuracy.
In November 2011, two LPS employees were indicted by a Nevada grand jury on charges they supervised a robo-signing scheme that result resulted in the filing of tens of thousands of fraudulent documents.
Nevada Attorney General Catherine Cortez Masto followed with a civil lawsuit against the company.
From the West Virginia Record: Reach John O’Brien at email@example.com.