Politics & MoneyMortgage

ServiceLink fined $65 million for LPS foreclosure deficiencies

Fine related to 2011's industry-wide foreclosure settlement

In 2011, Lender Processing Services was part of a massive settlement with the government over industry-wide foreclosure misconduct that occurred after the housing crash.

That settlement stemmed from document missteps in the third-party foreclosure process at some very large banks and mortgage servicers in the aftermath of the subprime crisis.

The settlement also included names like Bank of AmericaJPMorgan ChaseWells Fargo, and Citigroup.

While those names stuck around, LPS eventually disappeared. LPS’ former parent, Fidelity National Financial, bought up the company and merged it with another subsidiary, ServiceLink Holdings, and formed Black Knight Financial Services.

On Tuesday, the ghost of LPS came back to haunt ServiceLink and Black Knight, as the Federal Reserve, Office of the Comptroller of the Currency, and the Federal Deposit Insurance Corp. announced that they are fining ServiceLink $65 million for the “improper actions” of LPS that contributed to that 2011 settlement.

A release from the government agencies is scant on details that led to the fine.

The agencies simply state:

The federal banking agencies today fined ServiceLink Holdings, LLC (ServiceLink Holdings), $65 million for improper actions by its predecessor company, Lender Processing Services, Inc. (LPS), which resulted in significant deficiencies in the foreclosure-related services that LPS provided to mortgage servicers.

The penalty assessed by the three federal banking agencies–the Federal Reserve Board, the Federal Deposit Insurance Corporation, and the Office of the Comptroller of the Currency–against ServiceLink Holdings satisfied the document review provision of the previous enforcement action.

The accompanying consent order, which can be read here, references the history of LPS, and how the terms of the original consent order transferred as LPS changed hands and eventually merged.

The new consent order states that on Jan. 17, 2017, the board of managers of ServiceLink authorized the company’s chief compliance officer, Paul Perez, to enter into the amended consent order and agree to the fine.

The agencies say that LPS will send the $65 million fine to the Department of the Treasury.

The agencies also say that they will continue to monitor the ServiceLink’s compliance with other provisions of the original and amended consent order.

HousingWire attempted to contact Fidelity National, ServiceLink, and Black Knight for comment on the fine.

A Black Knight spokesperson said that the company "is not a party to the agreement and is not responsible for paying any portion of the fine."

This article will be updated should one of the other companies respond.

[Update: This article is updated with a statement from Black Knight.]

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