MortgageRegulations

Facing foreclosure fraud claims, HSBC settles at $601 million

Various government regulators allege the bank had shoddy mortgage servicing and foreclosure activity oversight
  • In response to charges of mortgage lending and foreclosure abuses, HSBC will pay more than $600 million to various government agencies.
  • Moving forward, the banking and financial services company will be required to evaluate homeowners for potential loss-mitigation options before pursuing foreclosure.
  • This news comes alongside charges that HSBC failed to prevent money laundering by Mexican drug cartels and hid transfers from international clients.

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HSBC Holdings will pay government regulators and law enforcement agencies a total of $601 million in response to allegations of mortgage origination, servicing and foreclosure abuses. The largest portion of the settlements is the $470 million that HSBC Bank USA and its affiliates agreed to pay to the Department of Justice, the Department of Housing and Urban Affairs, the Consumer Financial Protection Bureau, 49 state attorneys general and the District of Columbia’s attorney general. The settlement puts to rest claims that it failed to provide effective oversight of the loan servicing, loss mitigation, foreclosure activities and related mortgage servicing functions, including the bank’s risk management, audit and compliance programs; vendor management; document execution practices; and staffing and managerial resources. Of that total, $370 million will go toward consumer relief in the form of reducing the principal on mortgages for borrowers who are at risk of default...