Massachusetts AG Martha Coakley reaches $1.6 million settlement with company tied to `robosigning’

Massachusetts is expected to receive about $1.6 million from a Florida-based foreclosure processing company as part of a multi-state settlement to resolve allegations the firm engaged in document “robosigning,’’ attorney general Martha Coakley said Thursday.

The company, Lending Processing Services Inc., and its subsidiaries, LPS Default Solutions and DocX, agreed to a $120 million accord with 46 attorneys general to settle claims of “improper’’ conduct related to the company’s foreclosure procedures, the attorney general’s office said.

As part of the accord, LPS acknowledged that DocX employees used other people’s names when they signed documents, a process called “surrogate signing,’’ Coakley said.


“Fabricating signatures, or robo-signing, real estate documents is a serious violation of state law and puts homeowners at risk of fraud,’’ she said. “LPS has agreed to end this unauthorized action, reform its business practices, and correct any harm caused by the misconduct.’’

LPS said Thursday the settlements confirm its “ongoing commitment to stronger compliance and oversight of its operations.’’

The settlement is the latest stemming from allegations of fraudulent practices related to foreclosure practices in late 2010, problems which caused a national slowdown in property seizures as lenders and government regulators scrutinized the industry.

Robosigning — the practice of signing foreclosure documents without properly reviewing or even reading them — became part of the national lexicon.

Among the results of investigations into the industry was a $26 billion national deal between attorneys general and five of the country’s top lenders over allegations of mortgage fraud.

As part of Thursday’s agreement filed in Suffolk Superior Court, LPS will pay nearly $1.6 million to Massachusetts for “enforcement costs and addressing the harm caused by the misconduct,’’ Coakley’s office said. Details of how the funds will be used are still be determined, an agency spokesman said.

John O’Brien Jr., head of the Southern Essex District Registry of Deeds in Salem, said the settlement was too small and that registers of deed should have been included in negotiations.


O’Brien in January filed a claim against DocX in federal court in Florida for more than $1 million in restitution for constituents in his district. He claims the company tainted the property titles of about 10,000 homeowners in the county.

“It is not even a slap on the wrist. They’ve completely destroyed people’s chains of title,’’ O’Brien said. “I equate this to an oil spill. They contaminated records and nobody seems to want to clean them up.’’

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