New York Attorney General Eric T. Schneiderman has announced a multi-state settlement with Lender Processing Services, Inc. and its subsidiaries, LPS Default Solutions and DocX to resolve claims of unlawful foreclosure practices, including robo-signing. The $121 million settlement, reached by New York, 44 other states and the District of Columbia, will require LPS and its subsidiaries to reform their business practices and, if necessary, to correct documents it improperly executed that harmed homeowners. New York’s share of the settlement is approximately $1.9 million. The states on this investigation’s executive committee are Florida, Illinois, Arizona, California, Connecticut, Iowa, North Carolina, Oregon, Pennsylvania, South Carolina, Texas and Washington. “Lender Processing Services Inc., LPS Default Solutions and DocX cut corners in order to maximize their profits,” said Attorney General Schneiderman. “My office will pursue any company that generates false or robo-signed documents that are used to foreclose on New York homeowners.” The proposed consent judgment resolves allegations that the Jacksonville-based company “robo-signed” documents and engaged in other improper conduct related to mortgage loan default servicing. LPS Default Solutions and DocX primarily provide technological support to banks and mortgage loan servicers. Among other things, the settlement prohibits signature by unauthorized persons or those without first-hand knowledge of the facts attested to in filed documents, enhances oversight of the default services provided, and requires review of all third-party fees to ensure that the fees have been earned and are reasonable and accurate. The settlement also accomplishes the following: ► 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 is employed; ► 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); and ► 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. Once the judgment is entered by the courts, LPS will undertake a review of documents executed during the period of Jan. 1, 2008 to Dec. 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 of the status of its review and/or modification of documents.