BOSTON — A national document processing company agreed to pay $120 million to settle allegations it “robosigned” documents and engaged in other improper conduct related to mortgage loan default servicing, it was announced yesterday.
Massachusetts attorney general Martha Coakley and New Hampshire attorney general Michael A. Delaney joined 44 others in the consent judgment requiring Lender Processing Services of Jacksonville and subsidiaries LPS Default Solutions and DocX to reform their business practices and, if necessary, correct documents they executed to assist homeowners.
LPS primarily provided technological support to banks and mortgage loan servicers.
Under the terms of the settlement, LPS will pay nearly $1.6 million in fees and costs to Massachusetts and $457,961 to New Hampshire, which will be allocated toward enforcement costs and addressing the harm caused by the misconduct.
“Fabricating signatures, or robo-signing, real estate documents is a serious violation of state law and puts homeowners at risk of fraud,” Coakley said. “LPS has agreed to end this unauthorized action, reform its business practices, and correct any harm caused by the misconduct.”
In the settlement, LPS acknowledged important facts uncovered in the investigation, including the practice by DocX of robo-signing or 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, as well as other improprieties in the document filing process.
“Among the most egregious practices during the recent foreclosure crisis was the robosigning of foreclosure documents,” Delaney said. “This settlement requires those firms who were responsible for much of that activity to pay for their illegal practices and to correct the documents that they improperly executed. We hope that this settlement will let others know that New Hampshire takes the threats to the integrity of such documents seriously, and will cause anyone intending to engage in similar practices in the future to think twice before doing so.”
The consent judgment will require proper execution of documents and prohibit signature by unauthorized persons or those without first-hand knowledge of facts attested to in the documents, enhanced oversight of the default services provided, and a review of all third-party fees to ensure that the fees have been earned and are reasonable and accurate.
Banks in 2010 slowed the pace of foreclosures, which peaked during the financial crisis and subsequent recession, after news reports of banks and subcontractors forging signatures and improperly notarizing foreclosure documents, including those detailing which institution acutally owned a given mortgage. Forged or invalid documents in a property’s title chain can cause problems for owners trying to sell or refinance their property.