HSBC to Be Sued by N.Y. for Foreclosure Law Violations
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HSBC Holdings Plc (HSBA) broke New York foreclosure law and put homeowners at greater risk of losing their homes, according to New York Attorney General Eric Schneiderman, who said he is suing the bank today.
A state investigation found that HSBC (HSBA) has left homeowners languishing in foreclosure by failing to meet requirements for giving them an opportunity to negotiate loan modifications, according to Schneiderman’s office.
“Companies like HSBC are brazenly ignoring state law, leaving homeowners across New York stuck in a legal limbo where they can’t even get the legally required settlement conference that could help them keep their homes,” the attorney general said in a statement.
The lawsuit comes as state attorneys general nationwide have targeted banks over foreclosure practices, last year reaching a $25 billion settlement with five mortgage servicers, including Bank of America Corp. and Wells Fargo & Co. (WFC) (WFC) HSBC wasn’t part of that settlement.
Schneiderman said in May that he was prepared to sue Bank of America and Wells Fargo (WFC) for allegedly violating terms of the nationwide settlement, which set requirements for servicing mortgages and provided monetary relief for homeowners. Schneiderman said the lenders have failed to comply with standards for processing applications from homeowners for loan modifications.
The HSBC case, to be filed in state court in Buffalo, stems from a New York law pertaining to foreclosures and court-supervised settlement conferences in which homeowners can try to negotiate alternatives to foreclosure such as a loan modification that lowers their monthly payments.
Diane Soucy Bergan, a spokeswoman for London-based HSBC, declined to comment on the matter.
Lenders and servicers who sue to foreclose in New York must file paperwork that triggers a requirement that a settlement conference be held within 60 days.
The state found that HSBC failed to file the required paperwork in hundreds of foreclosure cases in New York, in some cases putting off the document filing for more than two years. HSBC continued to charge interest and fees, increasing the amounts owed by homeowners. Those charges reduce the likelihood a person will qualify for a loan modification because their principal balance has increased, according to the state.
The attorney general will seek to recover restitution and damages for homeowners and force HSBC to file the required papers in pending foreclosure actions and future cases.
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