Attorney General Dustin McDaniel announced today that he and 44 other attorneys general reached the settlement with a Florida-based company alleged to have engaged in robo-signing of foreclosure documents and other improper conduct related to mortgage loan default servicing.
Lender Processing Services Inc., and its subsidiaries, LPS Default Solutions and DocX, acted on behalf of mortgage servicers to process foreclosure documents, but are alleged to have done so without properly reviewing the documents, a practice known as robo-signing.
"These types of actions contributed to the mortgage crisis, and may interfere with our recovery," McDaniel said. "Homeowners who face foreclosure should have the confidence that they are being treated fairly, instead of worrying that companies are cutting corners to maximize their own profits. In addition, it is important that new homeowners buying foreclosed property have the confidence that the foreclosure was properly completed."
Arkansas's share of the settlement is $692,496. McDaniel filed a lawsuit and proposed consent judgment in Pulaski County Circuit Court today.
Under terms of the consent judgment, the company will be required to reform its business practices and, if necessary, correct documents it improperly executed from 2008-2010. The company is prohibited from allowing the signature of documents by unauthorized persons or those without first-hand knowledge of the facts attested to in the documents.
The company stipulated to facts uncovered during the attorney generals' investigation, including the practice by DocX of so-called "surrogate signing." That 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. Other improprieties in the document execution and recordation or filing process also were discovered.
The agreement requires enhanced oversight of the services provided by the company, as well as a review of all third-party fees to ensure that the fees are reasonable and accurate. The company is prohibited from surrogate signing or from notarizing documents outside the presence of a notary. Also, LPS must avoid earlier practices that may have caused attorneys handling foreclosures to value speed over accuracy in the foreclosure process.
The company is required to set up a toll-free number for consumers to call to request review and correction of documents. LPS must also update the Attorney General periodically on the status of its review and modification of documents executed from 2008 to 2010.
Today's settlement follows a landmark $25 billion agreement reached with the nation's five mortgage servicers in February 2012 after a 16-month state and federal investigation into mortgage-servicing practices. McDaniel's office continues to investigate mortgage and foreclosure issues.