Processing Services will pay an aggregated sum of $127 million to
resolve suits with 46 states and the District of Columbia arising out of
activities of its former subsidiary DocX
LLC. The company previously announced
settlements with three other states, leaving a complaint filed by the Attorney
General of Nevada as the only unresolved issue.
addition to the cash LPS confirmed its ongoing commitment to stronger
compliance and oversight of its operations - and to continue its remediation
complaints alleged that DocX implemented what the U.S. Justice Department, in a
related action, called a six-year scheme to prepare and file more than 1
million improper mortgage documents. The
former CEO of DocX, Lorraine Brown, pled guilty in federal court last November to
participating in the scheme, part of the so-called robo-signing scandal, and is
DocX's clients were residential
mortgage servicers that hired the company to, among other things, assist in
creating and executing mortgage-rated documents to be filed with recorders'
offices. The servicers authorized specific DocX personnel to sign the
documents on their behalf. According to Brown's plea documents, she
directed employees to forge and falsify signatures on these documents and,
unbeknownst to the servicers, allowed employees who were not so authorized to
sign the documents and have them notarized as if actually executed by the
properly designated personnel.
LPS said it is working toward resolving outstanding civil
litigation and earlier this week settled the securities fraud litigation
brought by St. Clair Shores General Employees' Retirement System, subject to
entry of a final order by the federal district court. Additionally, in December
2012, LPS resolved litigation filed by American Home Mortgage Servicing, Inc.
"Today's settlements are another major step toward putting issues related
to past business practices behind us," said LPS President and Chief
Executive Officer Hugh Harris. "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." He said the company
looks forward to favorably resolving its remaining regulatory and legal issues
in the near future.
As a result of these settlements, as well as progress on other outstanding
legal issues, LPS increased its legal and regulatory reserve in the quarter
ended Dec. 31, 2012, by $48 million (which includes $14 million for the
securities fraud settlement that was not previously included in the reserve).
As of Dec. 31, 2012, the balance in the company's legal reserve, after the
payment of expenses, was $223 million.