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  1. Mortgages
  2. Mortgage Lenders

HSBC Will Pay $470 Million for Mortgage Abuses

Published: Feb 05, 2016 3 min read
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The HSBC Holdings Plc headquarters stands in the Canary Wharf business, financial and shopping district in London, U.K., on Wednesday, Jan. 13, 2016. The pound touched its weakest level since February versus the euro before the Bank of England's first policy decision of the year. Photographer: Chris Ratcliffe/Bloomberg via Getty Images
Bloomberg—Bloomberg via Getty Images

Some Americans who lost their homes to foreclosure during the financial crisis will soon be eligible for relief. Today New York Attorney General Eric Schneiderman announced that the state has reached a settlement with HSBC over charges that the mortgage lender engaged in abusive foreclosures and related practices. The attorney general accused HSBC of "robo-signing" foreclosure documents and evicting people from their homes without adequate verification.

“There has to be one set of rules for everyone, no matter how rich or how powerful, and that includes lenders who engage in abusive business practices,” Schneiderman said in a statement. “The settlement announced today is a joint partnership that will create tough new servicing standards that will ensure fair treatment for HSBC’s borrowers and provide relief to customers across New York State and across the country.”

The U.S. Department of Justice, the U.S. Department of Housing and Urban Development, the Consumer Financial Protection Bureau, and attorneys general from 48 other states and D.C. were also parties to the settlement.

As part of the settlement, HSBC has agreed to set aside $370 million for customer relief. Customers may be able to get loan modifications like principal reductions and refinancing for underwater mortgages. Some 136,000 New Yorkers with HSBC mortgages who faced foreclosure between Jan. 1, 2008 and Dec. 31, 2012 will also be eligible to claim a payment from a $59.3 million national fund. Borrowers will be contacted if they are eligible for these payments.

Additionally, HSBC has agreed to a set of mortgage servicing standards, like making foreclosure a last resort and giving each borrower one contact person at HSBC to contact regarding questions about their mortgages. An independent monitor will ensure HSBC abides by the standards.

“We are pleased to have reached this settlement and believe it is a positive result that benefits American homeowners and the US housing industry,” HSBC CEO Kathy Madison said in a statement.