Lender Processing Services (LPS) will pay $127 million to settle charges by 46 states that the company forged documents that were used to foreclose on homeowners.
The settlement, which the Jacksonville, Fla., company announced Thursday, resolves allegations that Lender Processing Services and its Default Solutions and DocX subsidiaries "robo-signed" papers in an effort to quickly process foreclosures on behalf of mortgage servicers.
The pact prohibits Lender Processing Services from using unauthorized surrogates to sign papers on behalf of servicers, bars the company from notarizing documents outside the presence of a notary, and precludes it from offering lawyers or others who handle foreclosures for Lender Processing Services incentives that sacrifice accuracy for the sake of speed or volume.
The settlement also forbids Lender Processing Services from marking up fees unreasonably on foreclosure-related services by third parties and requires the company to maintain a toll-free telephone number to answer questions from borrowers about processes and property-preservation services.
"Today's settlements are another major step toward putting issues related to past business practices behind us," Hugh Harris, Lender Processing Services' chief executive, said in a statement.
An executive committee of attorneys general in Florida, Illinois, Arizona, California, Connecticut, North Carolina, Oregon, Iowa, Pennsylvania, South Carolina, Texas and Washington spearheaded the probe by the states.
Lender Processing Services and its subsidiaries "cut corners in order to maximize profits," New York Attorney General Eric Schneiderman, whose state was among those that signed on to the settlement, said in a statement.
The company, which still faces a lawsuit by the State of Nevada and litigation that stems from its activities in the run-up to the mortgage meltdown, says it set aside an additional $48 million in the fourth quarter for its legal reserve, which was $223 million as of Dec. 31.