HSBC Agrees $470 Million Settlement Over Alleged U.S. Mortgage Abuses--Update
February 05 2016 - 1:16PM
Dow Jones News
By Margot Patrick
LONDON-- HSBC Holdings PLC agreed Friday to pay $470 million to
settle federal and state allegations of abusive practices in its
U.S. mortgage business.
The British bank must make major changes to how it services
mortgages and handles foreclosures in the U.S. and will compensate
some customers who lost their homes or had their loans modified. An
independent monitor will oversee its compliance with the agreement
for a year.
The civil settlement with the U.S. Justice Department, other
federal agencies and U.S. states adds to a list of penalties around
HSBC's mortgage lending and servicing business, which authorities
say was rife with problems and rushed people out of their homes.
HSBC paid $249 million in 2013 to settle similar allegations by the
Federal Reserve and the Office of the Comptroller of the
Currency.
The alleged abuses took place in the aftermath of the financial
crisis when many U.S. homeowners struggled to keep up with their
mortgage payments. Millions lost their homes when a housing bubble
inflated by loose lending popped in 2008. Authorities said HSBC
will pay $100 million to the federal agencies and states, and
around $370 million to borrowers and homeowners through various
channels including modifying loan terms.
"There has to be one set of rules for everyone, no matter how
rich or how powerful, and that includes lenders who engage in
abusive business practices," said New York Attorney General Eric
Schneiderman.
The Justice Department "remains committed to rooting out
financial fraud and holding bad actors accountable for their
actions," said Associate Attorney General Stuart Delery.
U.S. authorities started cracking down on foreclosure procedures
around 2010, after some banks were found to be serially submitting
bogus mortgage documents when attempting to repossess homes. The
same federal agencies and states entered a $25 billion settlement
over similar allegations with five large U.S. banks in 2012. The
Justice Department said it had been in negotiations with HSBC since
then to reach a separate accord.
"We are pleased to have reached this settlement and believe it
is a positive result that benefits American homeowners and the U.S.
housing industry," said Kathy Madison, chief executive of HSBC
Finance Corp. "Throughout the housing market downturn, HSBC stayed
focused on home preservation and approached foreclosure as a last
resort option, and this agreement affirms our commitment to
assisting customers who are facing financial difficulties."
HSBC, across its operations, has paid out billions of dollars in
fines and settlements in the past several years, including $1.9
billion over failures in its systems that allegedly allowed drug
traffickers and sanctioned nations to move money through its U.S.
bank. The settlements have weighed on the bank's earnings and
helped jack up its compliance costs. It is due to report full-year
results on Feb. 22.
Write to Margot Patrick at margot.patrick@wsj.com
(END) Dow Jones Newswires
February 05, 2016 13:01 ET (18:01 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
Hsbc (LSE:HSBA)
Historical Stock Chart
From Mar 2024 to Apr 2024
Hsbc (LSE:HSBA)
Historical Stock Chart
From Apr 2023 to Apr 2024