HSBC faces court action in US over foreclosures

Hundreds of homeowners at greater risk of losing properties


HSBC put hundreds of homeowners at greater risk of losing their properties by failing to file paperwork to initiate settlement talks, New York state prosecutors alleged in a civil lawsuit filed yesterday.

The lawsuit by state attorney general Eric Schneiderman, which seeks to recover unfair mortgage charges, accuses HSBC of ignoring a state law designed to initiate talks between homeowners and banks to resolve foreclosure cases.

The move is HSBC’s latest legal setback in the US. In December the bank agreed to pay a $1.3 billion (€1.22 billion) fine to the department of justice and a further $665 million to US regulators to settle money-laundering and sanctions breaches.

It also signed a deferred prosecution agreement to resolve criminal charges.

New York state alleges that HSBC failed to file the required paperwork in hundreds of foreclosure cases – which would have triggered a settlement conference – and continued to charge interest and fees. In some cases, the bank is accused of putting off filing the document for more than two years.

This increased the amounts that homeowners owed and reduced their chances of qualifying for relief, the lawsuit alleges. The state is seeking restitution of interest and fees charged to homeowners. “Companies like HSBC are brazenly ignoring state law, leaving homeowners . . . in a legal limbo,” Mr Schneiderman said.

HSBC said it was “committed to complying with the law when it comes to foreclosure”. – (Copyright The Financial Times Limited 2013)