Washington joins $120 million multi-state settlement with Lender Processing Services, Inc. Roughly $4 million for Washington state
As part of the ongoing effort to address the national foreclosure crisis, Attorney General Bob Ferguson today announced his office, 44 other Attorneys General and the District of Columbia have reached a $120 million multi-state settlement with Lender Processing Services, Inc. (LPS) and its subsidiaries, LPS Default Solutions and DocX. The office also settled with LPS-subsidiary, LSI Title, for activities as a foreclosure trustee in Washington.
“Robo-signing played an important role in the foreclosure crisis, impacting thousands of Washington families,” Ferguson said. “This settlement is one more opportunity to help right the many wrongs that occurred over the last several years—and to improve lending and foreclosure practices for homeowners in the future.”
Washington’s share of settlement is approximately $4 million and the Attorney General’s Office will receive an additional $433,000 in attorneys’ costs and fees as a member of the investigative team. The terms of the settlement require that the remaining monies be applied to the consumer protection enforcement fund, used to defray costs of the inquiry leading to the settlement, or for any other purpose permitted under our state’s consumer protection act.
The proposed consent judgment filed today in King County Superior Court resolves allegations that the Jacksonville-based company, which primarily provides technological support to banks and mortgage loan servicers, “robo-signed” documents and engaged in other improper conduct related to mortgage loan default servicing.
Once entered by the court, the judgment requires LPS and its subsidiaries to completely reform its business practices. It also requires them to correct documents it executed to assist the homeowner if necessary.
Among other things, 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. It also requires enhanced oversight of the default services provided and a review of all third-party fees to ensure that the fees have been earned, are reasonable and are accurate.
The settlement also:
• Prohibits LPS (including DocX) from engaging in the practice of surrogate signing of 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 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 servicers;
• 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 demonstrate 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.
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 in the document execution and recordation or filing process.
Once the judgment is entered by the courts, LPS will undertake a review of documents executed during the period of January 1, 2008 to December 31, 2010 to determine what documents, if any, 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 today’s settlement: Alabama, Alaska, Arizona, Arkansas, California, Connecticut, Florida, Georgia, Idaho, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, Maryland, Massachusetts, 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.
Washington also entered into a separate settlement agreement with an LPS-subsidiary, LSI Title, for activities as a foreclosure trustee. The settlement does not include a financial penalty but does require the company to be physically located in Washington moving forward and provides injunctive relief going forward.