The settlement resolves allegations that Lender Processing Services and two of its subsidiaries – LPS Default Solutions and DocX -- improperly “robo-signed” documents and engaged in other prohibited conduct related to the handling of its mortgage loan defaults servicing.

Filed today in New Jersey Superior Court, a Consent Judgment documenting the settlement requires Lender Processing Services, as well as its subsidiaries LPS Default Solutions and DocX, to reform its business practices and, if necessary, correct documents to assist homeowners.

Among other things, the Consent Judgment requires proper execution of mortgage loan documents, and prohibits signature by unauthorized persons, or those without first-hand knowledge of facts attested to in the documents. The settlement also calls for enhanced oversight of default services provided, and a review of all third-party fees to ensure that the fees have been earned and are reasonable and accurate.

 The settlement also:

• Prohibits LPS (including DOCX) from engaging in the practice of surrogate signing of documents.

• Ensures that LPS has proper authority to sign documents on behalf of a servicer, if in fact it is signing documents.

• Requires LPS to accurately identify the authority that the signer has to execute the document and where that signer works.

• Prohibits LPS from notarizing documents outside the presence of a notary and ensures that notarizations will comply with applicable laws.

• Prohibits LPS from improperly interfering with the attorney-client relationship between attorneys and services.

• Prohibits LPS from incentivizing or promoting attorney speed or volume to the detriment of accuracy.

• Requires LPS to ensure that foreclosure and bankruptcy counsel or trustees can communicate directly with the servicer.

• Requires LPS to have enhanced oversight and review of processes over third parties it manages, including those entities that perform property preservation services.

• Prohibits LPS from imposing unreasonable mark-ups or other fees on third party providers’ default or foreclosure-related services.

• Requires 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).

• Requires 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.

In the settlement, LPS stipulates to important facts uncovered in the investigation, including the practice by DocX of so-called “surrogate signing” -- 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, as well as other improprieties in the document execution and recording or filing process.

Once the Consent Judgment is entered by the courts, LPS will undertake a review of documents executed during the period of January 1, 2008 to December 31, 2010 to determine what documents, if any, need to be re-executed or corrected

If LPS is authorized to make the corrections, it will do so and will make periodic reports to the Attorney General on the status of its review and/or modification of documents.

Consumers may also call the LPS toll-free number and request review and correction of any documents executed by LPS at any time. In addition to New Jersey, 44 other states and the District of Columbia participated in the total $120 million multi-state settlement.

New Jersey was among the investigating States in the LPS matter, along with Arizona, California, Connecticut, Florida, Illinois, Iowa, Oregon, North Carolina, Pennsylvania, South Carolina, Texas and Washington.

The LPS matter was handled on behalf of the State by Special Deputy Attorney General Krima D. Shah of the Division of Law’s Affirmative Civil Enforcement Practice Group, and Deputy Attorney General Patricia Schiripo, Assistant Chief of the Division of Law’s Consumer Fraud Prosecution Section.

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