One of the biggest U.S. mortgage processing companies has agreed to pay $121 million to resolve states' claims that it wrongfully foreclosed on homeowners who should have been allowed to stay in their homes.
The settlement agreements between Jacksonville, Fla.-based Lender Processing Services Inc. and 46 states and the District of Columbia were announced Thursday.
Under the settlement, the company will be required to reform its business practices and to correct foreclosure documents as necessary. The agreement prohibits unauthorized people or those without first-hand knowledge of the facts laid out in documents to sign them. The money goes to the states and the District of Columbia.
The state attorneys general alleged that the company engaged in unlawful practices including "robo-signing," in which it automatically signed off on foreclosures without properly reviewing documents.
Lender Processing said it increased its legal reserve by $48 million in the quarter ended Dec. 31. The balance of the reserve was $223 million as of Dec. 31, the company said in a news release.
Lender Processing also said it has continued to resolve civil lawsuits against the company.
In April 2011, the company signed a consent order with the Federal Deposit Insurance Corp. and two other federal agencies in which it pledged to change its loan processing procedures.
The federal government and 49 states struck a $25 billion settlement last February over foreclosure practices with five major banks: Ally Financial, Bank of America, Citigroup, JPMorgan Chase and Wells Fargo.