[[Update 1: Adds comment from PHH]]

An Illinois regulatory agency fined PHH Mortgage $290,000 in the first fine levied in a probe of 20 state-licensed mortgage companies.

Mount Laurel, N.J.-based PHH was punished for allegedly signing foreclosure affidavits the company knew would later be altered by attorneys and for signing affidavits using someone else’s name, according to the Illinois Department of Financial and Professional Regulation.

The violations were found during the agency's special investigation launched last year, as the national robo-signing scandal arose in which employees at foreclosure law firms were signing and attesting to information in court foreclosure documents that they had not reviewed.

"At a time when homeowners are facing the possible loss of their most precious asset, homeowners have a right to expect their loan servicing company to file accurate and honest paperwork," said Brent Adams, Illinois secretary of financial and professional regulation. "Time and again, the department has sought to emphasize to loan servicing companies that home foreclosure is no time to cut corners."

PHH told HousingWire that it disputes the charge.

"PHH Mortgage is recognized as one of the nation’s leading mortgage servicers, and we take our responsibilities to borrowers seriously," PHH said, in a written statement provided to HousingWire after it called seeking comment.  "We dispute the findings of the Illinois Department of Financial and Professional Regulation, and we reject any assertion that the signatures of the affiants who signed on our behalf were not the signatures of those specific individuals. PHH Mortgage intends to request a hearing in this matter and pursue all available remedies."

PHH has 10 days to request a hearing on the order, or 30 days to pay the fine.

In at least 19 files, PHH failed to sign affidavits after they had been altered by attorneys and the company's "knowledge of and complicity with this process is evidenced by the fact that the original affidavits were incomplete and contained notations such as 'will add' when they were tendered to the law firm of Fisher and Shapiro," the department said in a written statement.

The law firm, acting on behalf of PHH, then attested to the completeness of the altered affidavits although they had not been reviewed or re-executed by PHH. The company's conduct "at the very least, rises to the level of negligence or incompetence," the state order said.

The agency also said 16 of the 19 affidavits were identified as having all been signed and attested to by the same PHH employee. The department noted at least five distinctly different signatures attributed to one employee, leading the agency to conclude at least four different people used one employee's name to sign the affidavits.

In December, the department issued a nine-point plan establishing best practices for handling foreclosure-related documents. Among the best practices: Affiants should have the level of knowledge necessary to submit an affidavit in a judicial proceeding and shall confirm that the numbers are accurate. Notarized documents must be done in the presence of the notary after an oath has been administered, and when using "form affidavits" nothing should be left blank, and signatures should be dated.

"PHH has violated both the Residential Mortgage License Act of 1987 and these best practices," the department said.

The act provides for a fine up to $25,000 for each violation. The state fined PHH $10,000 for each of the 19 files with faulty paperwork and $25,000 for four instances, in which an employee used a name other than his or her own.

In March, Bannockburn, Ill.-based foreclosure law firm Fisher and Shapiro admitted in Cook County Circuit Court that hundreds of its documents may be faulty, noting foreclosure affidavits had been altered without the affiant's knowledge. In those cases, the content of the original affidavits were changed, and the original signature page was removed and then reattached to the altered affidavits.

After the admission, a Cook County judge temporarily halted 1,700 foreclosure cases. The law firm said it promptly notified the court after its discovery of the flaw.

The Illinois probe is separate from a national probe also under way that has resulted in several consent orders and an investigation into servicers by the nation's 50 attorneys general.

Write to Kerry Curry.

Follow her on Twitter @communicatorKLC.