HSBC Holdings Plc agreed to pay $10 million to settle U.S. allegations that it overcharged Fannie Mae and the U.S. Department of Housing and Urban Development’s Federal Housing Administration on foreclosure fees.
U.S. District Judge Thomas Griesa in Manhattan yesterday gave final approval to the accord which settles a whistle-blower lawsuit and a fraud suit filed by the office of Manhattan U.S. Attorney Preet Bharara, Bharara’s office said in a statement.
HSBC, Europe’s largest bank, provided residential mortgage loan services such as collecting mortgage payments and pursuing foreclosures. The London-based bank failed to maintain a quality control program to review its services and also to ensure all costs submitted to Fannie Mae for reimbursement were reasonable, the U.S. said. The failure cost FHA and Fannie Mae millions of dollars, the government said.
The bank accepted responsibility for failing to create or maintain the systems from May 1, 2009, to Dec. 31, 2010, according to the settlement. Those systems included reviews of fees and charges submitted by outside law firms hired by HSBC to pursue foreclosures, according to the settlement.
“Since 2010, we have taken steps to enhance oversight of foreclosure law firms and put in place a robust law firm management and oversight program even before we received notice of this particular action,” Rob Sherman, a spokesman for HSBC in New York, said in an e-mailed statement.
HSBC also agreed to comply with all the rules applicable to services of mortgage loans insured by FHA and loans held or securitized by Fannie Mae and Freddie Mac, according to the accord.
The private whistle-blower lawsuit, which the U.S. joined, remains sealed and the government continues its investigation, according to the statement.
The case is U.S. v. HSBC, 13-cv-1467, U.S. District Court, Southern District of New York (Manhattan).
(An earlier version of this story was corrected with the name of the Federal Housing Administration.)