Lender Processing Services Inc. stock fell as much as 37% Friday after Dow Jones reported the company was the subject of an inquiry by the U.S. Trustees Office, an arm of the Justice Department that monitors bankruptcy courts.
A ruling by Judge Diane Weiss Sigmund in U.S. Bankruptcy Court in Philadelphia questioned inaccurate court filings by HSBC Mortgage Corp. in a personal bankruptcy case. HSBC relied on electronic information from an LPS system that manages foreclosure data.
Lender Processing in Jacksonville, Fla., runs an automated system to track mortgage payments and defaults; as recently as 2007 it was used by 39 of the country's 50 largest banks, according to Sigmund's ruling.
LPS stock trading was temporarily halted Friday morning but resumed after the company issued a statement saying it "is not aware, nor has it been informed, that it is the subject of a formal investigation by the Department of Justice."
