After Six Years, Agencies Fine Mortgage Processor $65 Million
It’s bad enough to be hit with a regulatory consent order. Now imagine the expense and public relations nightmare when those proceedings drag on for years.
Just ask Fidelity National’s subsidiary ServiceLink. This week the Fed, FDIC and OCC fined the company $65 million for improper actions taken by its predecessor company, Lender Processing Services, resulting in “significant deficiencies in the foreclosure-related services that LPS provided to mortgage servicers.”
You might remember LPS from the heyday of the mortgage foreclosure robo-signing scandal. The company was hit with a consent order back in 2011—almost six years ago. Lorraine Brown, one of the company’s former executives, served five years in jail for “her participation in a six-year scheme to prepare and file more than 1 million fraudulently signed and notarized mortgage-related documents with property recorders’ offices throughout the United States,” according to the Justice Department.
Brown got out of jail last August, and the company is just now settling with regulators—after having settled with several states for $127 million and paying $35 million to the Justice Department. The company had been negotiating the settlement since at least 2013, Bloomberg reports, getting acquired by Fidelity National in 2014.
Clearly LPS wasn’t following the law when it came to foreclosures, which means the financial institutions that outsourced to the firm weren’t either.
This is why vendor management exists. Vendor management gives institutions the policies, procedures and processes to conduct due diligence of vendors and make sure they have safeguards in place to ensure they are following laws and regulations.
Don’t let somebody else’s legal issues become your own. Practice smart vendor management.