By Jonathan Stempel
Feb 15 (Reuters) - The mortgage servicing company Lender
Processing Services Inc has agreed to pay $35 million to resolve
a federal criminal investigation into foreclosure fraud, the
U.S. Department of Justice said on Friday.
The settlement resolves allegations over the Jacksonville,
Florida-based company's involvement in what the government
called a six-year scheme to prepare and file more than 1 million
fraudulently signed and notarized mortgage documents in property
recorders' offices nationwide from 2003 to 2009.
Friday's accord also follows a guilty plea last November by
Lorraine Brown, the former chief executive of LPS' now-closed
DocX LLC unit, to a felony charge of conspiracy to commit mail
and wire fraud over the scheme.
Prior to DocX's closure in 2010, LPS had handled more than
half of the nation's foreclosures.
LPS entered into a two-year non-prosecution agreement that
requires it to meet many conditions, including cooperating in
federal probes, and alert the government to any abuses in
mortgage or foreclosure documentation services at the company.
The settlement followed LPS' agreement last month to pay
$127 million to resolve inquiries by 46 U.S. states and
Washington, D.C., over its document practices.
LPS on Friday said it has a $223 million reserve that covers
the Justice Department accord and prior settlements.
Chief Executive Hugh Harris in a statement said LPS has now
"effectively" addressed issues over its past business practices.
Foreclosure abuse became notorious in 2010 as borrowers,
politicians and regulators accused lenders of pursuing cases
that were based on defective or fraudulent documentation.
Many documents were found to have been signed systematically
without being read, through a process known as "robo-signing."
Last February, Ally Financial Inc, Bank of America Corp,
Citigroup Inc, JPMorgan Chase & Co and Wells Fargo & Co reached
a $25 billion settlement with the U.S. government and 49 states
to end probes into mortgage abuses.
The Justice Department said its settlement with LPS reflects
the company's cooperation, as well as steps taken by LPS to
address misconduct at DocX.
It said LPS has re-executed and refiled mortgage assignments
as necessary, improved compliance and training procedures, and
hired an independent consultant to monitor document execution.
Brown is scheduled to be sentenced on April 23 and faces up
to five years in prison, the Justice Department said.
The $35 million payment includes penalties and forfeiture,
and must be made within 10 days to the U.S. Marshals Service and
the U.S. Treasury, the Justice Department said.
Shares of LPS closed Friday down 17 cents at $25.09 on the
New York Stock Exchange. The settlement was announced after U.S.
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