US regulators target HSBC in mortgage row

Tim Wallace
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HSBC yesterday joined a long line of banks hit by allegations of breaking mortgage rules, with the New York State attorney general accusing the bank of failing to treat customers properly in foreclosure proceedings.

Eric Schneiderman filed the lawsuit claiming the British lender failed to give homeowners the chance to renegotiate their loans.

Lenders in the state are supposed to hold a court-supervised settlement conference to carry out this renegotiation within 60 days.

But Schneiderman claims HSBC left cases open for months or years leaving up to 25,000 families stuck in a backlog of cases and at more risk of losing their homes.

“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,” said the state attorney general.

“For homeowners facing foreclosure, time is their greatest enemy. Every day spent waiting for a settlement conference is a day that the lender piles on additional interest, fees and penalties and the homeowner falls further behind.”

“I am committed to doing everything I can to stand up for New Yorkers who are trapped in the shadow docket [backlog] and denied their right to fight for their homes.”

The regulator said his office has studied a sample of HSBC’s foreclosure cases and found 300 which were too slow, with some customers waiting almost two years and facing bills oftens of thousands of dollars in additional fees.

Schneiderman has been active in taking on banks – last month he announced plans to sue Bank of America and Wells Fargo accusing them of violating the terms of a wider legal settlement covering mortgage servicing problems.

“HSBC is committed to complying with the law when it comes to foreclosure. We will respond appropriately to the state attorney general in this matter,” HSBC said.