 Madigan and the attorneys general reached the settlement after an investigation
into the Jacksonville, Fla.-based firm and its subsidiaries -- LPS Default
Solutions and DocX, all of which primarily provide support to banks and mortgage
loan servicers.The attorneys general allege that LPS and its subsidiaries
engaged in widespread "robo-signing," of foreclosure documents and other
fraudulent handling of foreclosure proceedings against homeowners. The states'
investigation revealed a practice by DocX of so-called "surrogate signing," or
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, in
addition to other fraudulent practices during foreclosure filings.
"Today we've taken another step forward to hold accountable the many players
in the marketplace who contributed to the foreclosure crisis," Madigan said
Thursday. "LPS and its subsidiaries became a sort of document factory, literally
rubber-stamping thousands of foreclosures with no regard for fairness and
accuracy in the process."
A lawsuit and proposed consent judgment filed in Cook County Circuit Court
requires LPS and its subsidiaries to reform business practices and, if
necessary, correct faulty documents it filed in homeowner foreclosure
proceedings. Illinois' share of the settlement is more than $4 million.
The settlement will prohibit LPS from signing off on foreclosure documents
with signatures of unauthorized people or people without firsthand knowledge of
facts attested to in the documents. The agreement will also require LPS to
implement enhanced oversight and review all third-party fees to ensure the fees
have been earned and are reasonable and accurate.
The settlement also will:
-
Prohibit LPS and its
subsidiaries from engaging in the practice of surrogate signing of
documents.
-
Ensure LPS has proper
authority to sign documents on behalf of a servicer.
-
Require LPS to accurately
identify the authority that the signer has to execute the document and where
that signer works.
-
Prohibit LPS from notarizing
documents outside the presence of a notary and ensure that notarizations
will comply with applicable laws.
-
Prohibit LPS from improperly
interfering with the attorney-client relationship between attorneys and
servicers.
-
Prohibit LPS from
incentivizing or promoting attorney speed or volume to the detriment of
accuracy.
[to top of second column] |
-
Require LPS ensure
that foreclosure and bankruptcy counsel or trustees can
communicate directly with the servicer.
-
Require LPS to
implement enhanced oversight and review of processes over third
parties it manages, including entities that perform property
preservation services.
-
Prohibit LPS from
imposing unreasonable markups or other fees on third-party
providers' default or foreclosure-related services.
-
Require 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).
-
Require 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 court, LPS must review
documents that were executed between Jan. 1, 2008, through Dec. 31,
2010, to identify documents that need to be corrected. Any
corrections required of LPS will be reported to the attorneys
general.
Joining Madigan in the announcement were attorneys general from
Alabama, Alaska, Arizona, Arkansas, California, Connecticut,
Florida, Georgia, Hawaii, Idaho, Indiana, Iowa, Kansas, Kentucky,
Louisiana, Maine, 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.
Assistant Attorneys General Vaishali Rao and Andrew Dougherty
handled the case for the Illinois attorney general's Consumer Fraud
Bureau.
[Text from file received from the office
of
Illinois Attorney General Lisa
Madigan] |
