The mortgage servicing company Lender Processing Services agreed to pay $35 million to resolve a federal criminal investigation into foreclosure fraud, the Justice Department said on Friday.
The settlement resolves allegations over the 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. The practice became known as robo-signing.
The accord also follows a guilty plea last November by Lorraine Brown, the former chief executive of the company’s now-closed DocX unit, to a felony charge of conspiracy to commit mail and wire fraud over the scheme.
Prior to DocX’s closure in 2010, Lender Processing Services had handled more than half of the nation’s foreclosures.
The company entered into a two-year non-prosecution agreement that requires it to meet many conditions, including cooperating in federal investigations, and alerting the government to any abuses in mortgage or foreclosure documentation services at the company.
The company said on Friday that it has a $223 million reserve that covers the Justice Department accord and prior settlements.
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.
Robo-Signing Fraud Case Is Settled
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Robo-Signing Fraud Case Is Settled
