8th Feb 2016 06:27
LONDON (Alliance News) - HSBC Holdings PLC will pay USD470.0 million under a deal with US authorities to settle allegations of past "abusive" mortgage practices, covering loan origination, servicing and foreclosure.
The settlement, which was revealed on Friday and agreed with the US Justice Department, the Department of Housing & Urban Development and the Consumer Financial Protection Bureau, along with 49 state attorneys general and the District of Columbia, releases HSBC from civil claims over its past mortgage loan origination, servicing and foreclosure practices.
The bank will provide USD370.0 million in customer relief, for example in the form of reducing the principal on mortgages for borrowers who are at risk of default, with the remaining USD100 million to be split among three areas.
The settling federal parties will receive USD40.5 million of the sum, while another USD59.3 million will be used to make payments to borrowers who lost their homes to foreclosure between 2008 and 2012. The remaining USD200,000 will cover costs of investigations carried out by state attorneys.
"We are pleased to have reached this settlement and believe it is a positive result that benefits American homeowners and the US housing industry," said Kathy Madison, chief executive, HSBC Finance Corp.
"Throughout the housing market downturn, HSBC stayed focused on home preservation and approached foreclosure as a last resort option, and this agreement affirms our commitment to assisting customers who are facing financial difficulties," Madison added.
The agreement bears a likeness to the USD25.0 billion National Mortgage Settlement of 2012, which involved five of the largest US mortgage services, including the likes of JPMorgan Chase and Bank of America. Discussions with other mortgage industry servicers, such as HSBC, followed that settlement.
As well as the USD470.0 million in consumer relief and payments to federal and state parties, HSBC has agreed to be bound to mortgage servicing standards and be subject to independent monitoring of its compliance with the deal.
"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," New York Attorney General Eric Schneiderman said.
The standards are designed to prevent "foreclosure abuses" from recurring, with robo-signing, improper documentation and lost paperwork all listed by the authorities as past problems.
Principal Deputy Assistant Attorney General Benjamin Mizer, head of the Justice Department's civil division, said the agreement is part of an effort to address "root causes" of the financial crisis of 2007-09, which caused people to lose their homes to foreclosure.
By Samuel Agini; samagini@alliancenews.com; @SamuelAgini
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