HSBC Held Accountable for Abusive Mortgage Practices, Will Pay $601M Settlement
HSBC, the British banking giant, is set to pay $600 million to U.S. authorities as settlement for its abusive foreclosure and mortgage lending practices in the real estate market. In a recent Yahoo! News report, officials from the Justice Department said that Europe's biggest bank will pay $470 million in order to settle the allegations by the U.S. government, 49 states and the District of Columbia.
Stuart Delery, acting associate attorney general, said in a statement, "This agreement is the result of a coordinated effort between federal and state partners to hold HSBC accountable for abusive mortgage practices."
The Federal Reserve also announced that they've fined HSBC $131 million for "deficiencies in residential mortgage loan servicing and foreclosure processing." According to the settlement agreement, HSBC will pay $370 million in July as consumer relief for assistance on struggling homeowners.
The bank will additionally pay $100 million, which includes $59.3 million to a fund operated by the states that will help borrowers who had lost their homes to foreclosures between 2008 and 2012.
Attorney General Mark Brnovich said in a statement with azcentral.com, "Arizona homeowners on the verge of losing their homes shouldn't have to worry about mortgage companies taking advantage of them."
"This settlement holds HSBC accountable for its abusive practices and ensures HSBC will treat its borrowers more fairly in the future," he added.
This agreement came after an announcement four years ago that Arizona would receive $1.6 billion in a $26 billion settlement for unjust lending and mortgage transactions by five of the biggest lenders of the nation—Wells Fargo, Ally Financial, JPMorgan Chase, Citibank and Bank of America.
Qualified borrowers will be contacted about how to be eligible for the payments. Joseph Smith Jr., the National Mortgage Settlement's independent monitor, will be the one to oversee the HSBC agreement for one year to make sure that loan modification and payouts will happen as required in the settlement.