LPS Settles DocX Robo-Signing Litigation with 46 States

by devteam January 31st, 2013 | Share

LenderrnProcessing Services will pay an aggregated sum of $127 million tornresolve suits with 46 states and the District of Columbia arising out ofrnactivities of its former subsidiary DocXrnLLC.  The company previously announcedrnsettlements with three other states, leaving a complaint filed by the AttorneyrnGeneral of Nevada as the only unresolved issue. rnInrnaddition to the cash LPS confirmed its ongoing commitment to strongerrncompliance and oversight of its operations – and to continue its remediationrnefforts.  </p

Therncomplaints alleged that DocX implemented what the U.S. Justice Department, in arnrelated action, called a six-year scheme to prepare and file more than 1rnmillion improper mortgage documents.  Thernformer CEO of DocX, Lorraine Brown, pled guilty in federal court last November tornparticipating in the scheme, part of the so-called robo-signing scandal, and isrnawaiting sentencing.</p

DocX’s clients were residentialrnmortgage servicers that hired the company to, among other things, assist inrncreating and executing mortgage-rated documents to be filed with recorders’rnoffices.  The servicers authorized specific DocX personnel to sign therndocuments on their behalf.  According to Brown’s plea documents, sherndirected employees to forge and falsify signatures on these documents and,rnunbeknownst to the servicers, allowed employees who were not so authorized tornsign the documents and have them notarized as if actually executed by thernproperly designated personnel.</p<pLPS said it is working toward resolving outstanding civilrnlitigation and earlier this week settled the securities fraud litigationrnbrought by St. Clair Shores General Employees’ Retirement System, subject tornentry of a final order by the federal district court. Additionally, in Decemberrn2012, LPS resolved litigation filed by American Home Mortgage Servicing, Inc. <br /<br /"Today's settlements are another major step toward putting issues relatedrnto past business practices behind us,” said LPS President and ChiefrnExecutive Officer Hugh Harris. “As LPS continues to grow and exercise itsrnleadership in the mortgage industry, we remain committed to enhanced regulatoryrncompliance and operational excellence, which are crucial in our changingrnindustry.”  He said the companyrnlooks forward to favorably resolving its remaining regulatory and legal issuesrnin the near future. <br /<br /As a result of these settlements, as well as progress on other outstandingrnlegal issues, LPS increased its legal and regulatory reserve in the quarterrnended Dec. 31, 2012, by $48 million (which includes $14 million for thernsecurities fraud settlement that was not previously included in the reserve).rnAs of Dec. 31, 2012, the balance in the company's legal reserve, after thernpayment of expenses, was $223 million.

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About the Author


Steven A Feinberg (@CPAsteve) of Appletree Business Services LLC, is a PASBA member accountant located in Londonderry, New Hampshire.

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