A unit of Lender Processing Services Inc , a U.S. provider of paperwork used by banks in the foreclosure process, is being investigated by federal prosecutors, the Wall Street Journal reported on Saturday.

Citing people familiar with the matter, the newspaper said a government probe into the business practices of the LPS unit was criminal in nature. According to the report, the probe was disclosed in LPS's annual report in February.

The subsidiary being investigated is Docx LLC, which processes and sometimes produces documents used by banks to prove they own mortgages, the report said.

According to the report, among Docx documents being reviewed was one that incorrectly claimed an entity called Bogus Assignee was the owner of the loan.

The report cited LPS spokeswoman Michelle Kersch as saying that the bogus phrase was used as a placeholder and that some documents had been inadvertently recorded before the field was updated.

(Writing by James B. Kelleher)