One of the biggest U.S. mortgage processing companies has agreed to pay $121 million to resolve states' claims that it wrongfully foreclosed on homeowners who should have been allowed to stay in their homes.
The settlement agreements between Lender Processing Services Inc., based in Jacksonville, Fla., and 46 states and the District of Columbia were announced Thursday.
Under the settlement, the company will be required to reform its business practices and to correct foreclosure documents as necessary. The agreement prohibits unauthorized people or those without first-hand knowledge of the facts laid out in documents to sign them. The money goes to the states and the District of Columbia.
The settlement follows similar accords totaling $6 million that Lender Processing signed previously with Colorado, Delaware and Missouri. The company says that leaves Nevada's complaint as the only unresolved state case.
The state attorneys general alleged that the company engaged in unlawful practices including "robo-signing," in which it automatically signed off on foreclosures without properly reviewing documents.
Lender Processing said it increased its legal reserve by $48 million in the quarter ended Dec. 31. The balance of the reserve was $223 million as of Dec. 31, the company said in a news release.
Lender Processing also said it has continued to resolve civil lawsuits against the company.
In April 2011, the company signed a consent order with the Federal Deposit Insurance Corp. and two other federal agencies in which it pledged to change its loan processing procedures.
"Today's settlements are another major step toward putting issues related to past business practices behind us," company President and CEO Hugh Harris said in a statement. He said Lender Processing remains committed to improved compliance with regulations and strong operations.
The federal government and 49 states struck a $25 billion settlement last February over foreclosure practices with five major banks: Ally Financial, Bank of America, Citigroup, JPMorgan Chase and Wells Fargo.
In January, federal regulators signed settlements with 13 big banks that ended a review of mortgage loan files required under a 2011 federal action. Combined, the banks will pay $9.3 billion. They are Aurora, Bank of America, Citigroup, Goldman Sachs, HSBC, JPMorgan, MetLife Bank, Morgan Stanley, PNC Financial Services, Sovereign, SunTrust, U.S. Bank and Wells Fargo.
Lender Processing reached a separate settlement with Missouri last August over criminal allegations that phony signatures were used on foreclosure documents by its now-closed subsidiary DocX. Under the deal, Lender Processing agreed to pay Missouri $1.5 million and another $500,000 to reimburse the state attorney general's office for the cost of the investigation.
The company shut down DocX in 2010.
Shares of Lender Processing rose $1.70, or 7.6 percent, to $24.10 in afternoon trading Thursday. Its shares have traded in a 52-week range of $16.28 to $30.88.
- Company Legal & Law Matters