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Attorney General Mills Announces $500,000 Settlement for Maine in “Robo-Signing” Case with Lender Processing Services, Inc.
January 31, 2013
AUGUSTA – Attorney General Janet T. Mills announced today that her office has reached a settlement against Lender Processing Services, Inc. and its subsidiaries, LPS Default Solutions and DocX. The proposed judgment, which involves the Attorneys General of 45 states and the District of Columbia, resolves allegations that the Jacksonville-based company “robo-signed” documents and engaged in other improper conduct in mortgage loan default servicing.
The judgment filed today by the Maine Attorney General in Kennebec County Superior Court prohibits LPS from using “robo-signers” and improper notarizations. It will also require the company to review and correct all the documents it processed from 2008-2010 at the height of the foreclosure crisis.
“This settlement is a judgment in favor of the basic rights of ordinary people in the extraordinarily complex world of mortgage servicing,” said Mills. “With this decision LPS is prohibited from using practices like “robo-signing” and required to provide consumers with a fair review of their mortgage documents.”
In the proposed settlement, LPS stipulates to important facts uncovered in the investigation, including the practice by DocX of so-called “surrogate signing,” 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, as well as other improprieties.
“The unfair practices employed by this company contributed to a high rate of hastily processed foreclosures in Maine and across the country,” said Mills. “The funds from this settlement will be used to support housing counselors to help Maine homeowners avoid foreclosure.”
Maine will receive $500,000 as part of the $120.6 million multi-state settlement. The consent judgment requires LPS and its subsidiaries to reform their business practices, to correct documents that they previously executed and to offer assistance homeowners. It also accomplishes the following:
• Prohibits LPS (including DOCX) from engaging in the practice of surrogate;
• Ensures that LPS has proper authority to sign documents on behalf of a servicer;
• Requires LPS to accurately identify 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 and ensures that notarizations will comply with applicable laws;
• Prohibits LPS from improperly interfering with the attorney-client relationship between attorneys and services;
• Prohibits LPS from incentivizing or promoting attorney speed or volume to the detriment of accuracy;
• Requires LPS to ensure that foreclosure and bankruptcy counsel or trustees can communicate directly with the servicer;
• Requires LPS to have enhanced oversight and review of processes over third parties it manages, including those entities that perform property preservation services;
• Prohibits LPS from imposing unreasonable mark-ups or other fees on third party providers’ default or foreclosure-related services;
• Requires LPS to establish and maintain a toll-free phone number for consumers concerning document execution and property preservation services (including winterization, inspection, preservation, and maintenance); and
• Requires LPS to modify mortgage documents that require remediation when LPS has legal authority to do so and when reasonably necessary to assist a consumer or when required by state or local laws.
Once the judgment is entered by the courts, LPS will review the documents executed during the period of January 1, 2008 to December 31, 2010 to determine what documents need to be re-executed or corrected. If LPS is authorized to make the corrections, it will do so and will make periodic reports to the Attorney General of the status of its review and/or modification of documents. Consumers may also call the LPS toll-free number and request review and correction of any documents executed by LPS at any time.
The following states joined Maine in today’s settlement: Alabama, Alaska, Arizona, Arkansas, California, Connecticut, Florida, Georgia, Hawaii, Idaho, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maryland, Massachusetts, Minnesota, Mississippi, Montana, Nebraska, New Hampshire, New Jersey, New Mexico, New York, North Carolina, 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.