Attorney General Catherine Cortez Masto said Friday that the decision to sue followed an extensive investigation into the company's default servicing or residential mortgages in Nevada, specifically loans in foreclosure.
The lawsuit, filed Thursday in Clark County District Court in Las Vegas, includes allegations of widespread document fraud and improper control over foreclosure attorneys and the foreclosure process.
"The robo-signing crisis in Nevada has been fueled by two main problems: chaos and speed," Masto said in a statement, "We will protect the integrity of the foreclosure process. The lawsuit is the next logical step in holding the key players in the foreclosure fraud crisis accountable."
Lender Processing Services, based in Jacksonville, Fla., required employees to execute or notarize as many as 4,322 foreclosure-related documents a day, Masto said. The lawsuit asks for penalties of up to $17,000 per violation of the law.
Lender Processing Services said Friday it "strongly disputes" the allegations made in the complaint and plans to "vigorously defend" itself.
"LPS has cooperated with the attorney general's office for more than 14 months to resolve its inquiry," the company said. The lender services firm also accused Masto of improperly using a Washington, D.C., law firm in the investigation.
"The complaint highlights misconceptions about LPS and seeks to sensationalize a variety of false allegations in a misleading manner," the company said in a statement.
Lender Processing Services shares lost $3.04, or 17.53 percent, Friday to close at $14.30 a share on heavy volume of 7.8 million shares traded on the New York Stock Exchange.
The civil court filing follows the announcement that Nevada for 59 consecutive months has led the nation in foreclosures. Fidelity National Information, LPS Default Solutions Inc. and other subsidiaries of Lender Processing Services were charged in the attorney general's complaint.
