Lender Processing Services Inc. (LPS) reached a multistate settlement to resolve claims of improper foreclosure practices, including the “robosigning” of documents used to repossess homes.
The $127 million settlement involves 46 states and the District of Columbia, LPS said today in a statement. The settlement also will require LPS to reform practices and correct faulty foreclosure paperwork, Illinois Attorney General Lisa Madigan said in a separate statement.
“LPS and its subsidiaries became a sort of document factory, literally rubber stamping thousands of foreclosures with no regard to fairness and accuracy in the process,” Madigan said.
State attorneys general came together in 2010 to investigate claims of improper foreclosure practices by mortgage servicers, including robosigning, in which people rapidly signed documents without verifying facts. Five mortgage servicers, including JPMorgan Chase & Co. (JPM) and Bank of America Corp., last year reached a $25 billion settlement with 49 states and the federal government.
“This settlement reflects the efforts of the states to work together to remedy the widespread abuses occurring in the residential mortgage industry in the past few years,” Florida Attorney General Pam Bondi said in a statement.
LPS, based in Jacksonville, Florida, said the agreement resolves a probe into document preparation, verification, signing and notarization practices. The company’s shares rose 7.5 percent to $24.08 at 2:04 p.m. in New York.
LPS said it reached previous agreements with Missouri, Delaware and Colorado, leaving a complaint filed by Nevada as the only unresolved attorney general inquiry. LPS Chief Executive Officer Hugh Harris said the settlement is “another major step toward putting issues related to past business practices behind us.”
The states’ investigation found an LPS subsidiary engaged in “surrogate signing,” which is the signing of documents by an unauthorized person in the name of another and notarizing those documents as if they had been signed by the proper person, Madigan said.
New York Attorney General Eric Schneiderman said in a statement that the settlement will prohibit signatures by unauthorized people or those without first-hand knowledge of the facts attested to in foreclosure documents.