Cooper, 45 other state AGs win settlement with Lender Processing Services
Raleigh: – January 31, 2013 – (RealEstateRama) — A Florida company that is alleged to have robo-signed foreclosure documents will pay $120 million to North Carolina and 45 other states, fix incorrect documents and change its practices, Attorney General Roy Cooper announced Thursday.
“Practices like robo-signing rushed through foreclosures without giving people a fair shot to try to save their homes,” Cooper said. “When foreclosures have to happen, they need to be done right, and efforts to cut corners aren’t appropriate.”
Lender Processing Services, Inc. (LPS) of Jacksonville, FL and its subsidiaries, LPS Default Solutions and DocX, provide technological support to banks and mortgage loan servicers. Cooper and the other attorney generals allege that LPS signed foreclosure documents without proper review, a practice known as robo signing, and engaged in other improper conduct related to servicing mortgage loans in default.
An investigation by Cooper’s Consumer Protection Division and other attorneys general’s office uncovered that LPS subsidiary DocX allowed unauthorized people to sign documents in someone else’s name and then notarized those documents as if they had been signed by the proper person, among other improprieties.
LPS came under scrutiny around the same time that a massive effort by state attorneys general, state banking regulators, and federal agencies to investigate mortgage servicing and foreclosure abuses started in 2010. That investigation led to a landmark settlement with the nation’s five largest banks which Cooper won in February 2012, bringing more than $300 million in help to North Carolina homeowners and major reforms to mortgage and foreclosure practices nationwide.
Under a judgment approved today by Wake County Superior Court Judge Paul Ridgeway, LPS will pay $120 million to the states, including $4.2 million to North Carolina. LPS is also required to execute documents properly, prohibit signature by unauthorized people or those without first-hand knowledge of facts attested to in the documents, and ensure that any third-party fees charged are reasonable and accurate.
Specifically, the settlement:
Prohibits LPS (including DocX) from robo-signing documents;
Ensures that LPS has proper authority to sign documents on behalf of a servicer, if in fact it is signing documents;
Requires LPS to identify accurately the authority that the signer has to execute the document and where that signer works;
Prohibits LPS from notarizing documents outside the presence of a notary;
Prohibits LPS from interfering improperly with the attorney-client relationship between attorneys and servicers;
Prohibits LPS from promoting speed or volume instead of accuracy;
Requires LPS to ensure that foreclosure and bankruptcy counsel or trustees can communicate directly with the servicer;
Requires enhanced oversight and review of third parties LPS manages;
Prohibits LPS from imposing unreasonable fees on third party services;
Requires LPS to establish and maintain a toll-free phone number for consumers; and
Requires LPS to modify mortgage documents that need correcting, when LPS has legal authority to do so and when reasonably necessary to assist a consumer or comply with state or local laws.
Under today’s judgment, LPS will review documents it executed between January 1, 2008 and December 31, 2010 to determine what documents may need to be corrected. If LPS is authorized to make the corrections, it will do so. The company will update the attorneys general periodically on the status of its review and correction of documents. Consumers can also call a toll-free number that will be established by LPS and request review and correction of any documents executed by LPS at any time. The toll-free number is expected to be set up within a few weeks.
The following states joined North Carolina in today’s settlement: Alabama, Alaska, Arizona, Arkansas, California, Connecticut, Florida, Georgia, Hawaii, Idaho, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Minnesota, Mississippi, Montana, Nebraska, New Hampshire, New Jersey, New Mexico, New York, North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Carolina, South Dakota, Tennessee, Texas, Utah, Vermont, Virginia, Washington, West Virginia, Wisconsin, Wyoming, and the District of Columbia.
Free help for North Carolinians dealing with foreclosure is available from the State Home Foreclosure Prevention Project by calling 1-888-442-8188 or 1-888-623-8631.
Media contact: Noelle Talley (919) 716-6413