The HSBC settlement paves the way for smoother loan modifications and provides for payments to some borrowers for past foreclosure abuses, according to a statement from the Justice Department.
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The New York Attorney General’s office said the HSBC accord largely mirrored a 2012 national mortgage settlement that federal and state officials struck with five of the country’s largest banks, including Bank of America and JPMorgan Chase & Co.
Almost 136,000 eligible NY borrowers whose loans were serviced by HSBC and who lost their home to foreclosure from January 1, 2008 through December 31, 2012 and encountered servicing abuse will be eligible for a payment from the national $59.3 million fund for payments to borrowers.
In addition to the payments, the settlement requires HSBC to provide some borrowers with loan modifications or other relief. HSBC serviced the loans of these borrowers, who later lost their homes between 2008 and 2012. Cooper’s office has also helped negotiate similar settlements with Ocwen and SunTrust, totaling $2.65 billion nationally and $47.5 million in relief to North Carolina consumers.
The settlement includes MS, 48 other states, the District of Columbia, and the federal government. HSBC reached the settlement with the U.S. Justice Department, federal housing and consumer protection regulators and 49 states as well as the District of Columbia, according to a statement by New York Attorney General Eric Schneiderman. The National Mortgage Settlement resulted in new standards to prevent unnecessary and improper foreclosures and has provided more than $50 billion in relief to distressed homeowners to date.
Part of that big settlement included lenders working directly with homeowners to modify loans to help them avoid foreclosures. The modifications may include principal reductions and refinancing for underwater mortgages.
HSBC has stated that most of the loan modifications have already occurred. The Board will closely monitor compliance by HSBC with the requirements of the order.
The mortgage servicing investigation started after evidence emerged late in 2010 that banks had robo-signed thousands of foreclosure documents without properly reviewing paperwork. The National Mortgage Settlement’s independent monitor Joseph Smith Jr. will oversee the HSBC agreement for one year to ensure the payouts and loan modifications happen as required in the settlement.
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Maintaining adequate staff to handle calls from borrowers. An independent monitor will oversee its compliance with the agreement for a year. That action was among 14 corrective actions issued against Board-supervised mortgage servicers or their parent holding companies for unsafe and unsound practices in residential mortgage loan servicing and foreclosure processing.
