HSBC to be sued by New York state over home loans
05 June 2013
The state of New York is taking HSBC to court for allegedly ignoring a law meant to protect US homeowners from losing their houses.
HSBC's "illegal business practices make it more likely that homeowners will unnecessarily lose their homes," the lawsuit states.
Europe's largest bank is being accused of being tardy in filing paperwork involving 300 foreclosure cases in New York state.
According to HSBC, it was committed to complying with the laws regarding foreclosure.
In a statement HSBC added, "We will respond appropriately to the state attorney general in this matter."
Under the New York state law, lenders are required to make a "request for judicial intervention" when they sue a homeowner to start an action to recover mortgage repayments.
The request would supposedly lead to a so-called settlement conference within 60 days, giving the homeowner a final chance to renegotiate their loan payments before they lost their homes.
"(HSBC's) business practices not only violate the law, but they make it more likely that homeowners will unnecessarily lose their homes," state attorney general Eric Schneiderman said in the court filing.
Schneiderman's HSBC lawsuit follows a month of his saying he was prepared to sue Bank of America and Wells Fargo for violation of terms of a $25-billion nationwide settlement over mortgage servicing abuses.
''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 HSBC case, which would be filed in court in Buffalo, arises from a New York law pertaining to foreclosures and court-supervised settlement conferences in which homeowners could try to negotiate alternatives to foreclosure such as a loan modification that lowered their monthly payments.
Lenders and servicers who intend to sue for foreclose in New York need to file paperwork that triggered a requirement that a settlement conference be held within 60 days.
The state found that the bank did not file the required paperwork in hundreds of foreclosure cases in New York, and in some cases it put off the document filing for over two years even as it continued to charge interest and fees, increasing the amounts owed by homeowners.
Those charges reduced the likelihood of a person qualifying for a loan modification as their principal balance ballooned, the flilng alleges.