Lender Processing Services Inc. announced Thursday that it has agreed to pay $127 million to settle complaints by the attorneys general of 46 states and the District of Columbia over the company's role in the nationwide foreclosure mess.
Jacksonville-based LPS provides processing services for mortgage lenders for all phases of a home loan, including foreclosure when the loan goes bad.
The company has been under investigation for three years by federal and state authorities over allegations that one of its subsidiaries falsified documents for lenders who were foreclosing on homeowners.
LPS also said Thursday that it settled a securities fraud lawsuit brought by St. Clair Shores General Employees' Retirement System and another suit brought by American Home Mortgage Servicing Inc.
The company had previously announced settlements with the attorneys general of three states, and the only outstanding attorney general inquiry is by the state of Nevada.
"Today's settlements are another major step toward putting issues related to past business practices behind us," LPS CEO Hugh Harris said in a news release.
"We look forward to favorably resolving our remaining regulatory and legal issues in the near future," he said.
LPS said it set aside $48 million in reserves in the fourth quarter of 2012 to cover additional legal costs related to the foreclosure investigation, including $14 million for the securities fraud lawsuit settlement.
The company previously set aside $78.5 million in reserves in the fourth quarter of 2011 and $144.5 million in the second quarter last year.
The company had $223 million in its legal expense reserves at the end of 2012.
The latest settlement includes $8.6 million for the state of Florida, Attorney General Pam Bondi said in a news release.
"This settlement reflects the efforts of the states to work together to remedy the widespread abuses occurring in the residential mortgage industry in the past few years," Bondi said.
LPS was accused by the attorneys general of engaging in so-called "robo-signing" of foreclosure documents.
"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," Illinois Attorney General Lisa Madigan said in a news release.
In addition to the monetary penalties, the settlement also requires LPS to clean up its procedures for foreclosure documents.
"The proposed judgment holds LPS and its subsidiaries accountable and requires reforms that ensure the proper handling of residential mortgage-related documents," Bondi said.
However, LPS already has said it has been taking steps to remedy the problems and it closed the subsidiary accused of falsifying documents, DocX, in 2010.
"As LPS continues to grow and exercise its leadership in the mortgage industry, we remain committed to enhanced regulatory compliance and operational excellence, which are crucial in our changing industry," Harris said.
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