HSBC have been fined $470m (£325m) for ‘abusive mortgage practices’ during the 2007-2009 housing crisis in which millions of people lost their homes.
On Friday, HSBC agreed to pay the fine to settle the US federal and state investigations into alleged abuses against homeowners struggling to keep up with mortgage payments during the 2008 global financial crisis.
New York attorney general, Eric Schneiderman had this to say about the settlement “The settlement announced today is a joint partnership that will create tough new servicing standards that will ensure fair treatment for HSBC’s borrowers and provide relief to customers across New York State and across the country.”
The settlement with the US Department of Justice and 49 states plus DC centres on allegations that the bank “robot-signed” thousands of foreclosure documents which lead to evictions without properly reviewing the paperwork. HSBC have been ordered to pay $59.3m in compensation to borrowers who lost their homes between 2008 and 2012. However, as there are over 135,000 eligible borrowers in New York alone, the money might have to stretch quite a way.
Chief executive of HSBC Finance Corp, Kathy Madison said: “We are pleased to have reached this settlement and believe it is a positive result that benefits American homeowners and the US housing industry”.
She stated the throughout the crisis HSBC had “stayed focused on home preservation and approached foreclosure as a last resort option”.
The settlement also requires HSBC to change some of its policies and take corrective actions, including giving homeowners the chance to appeal foreclosures. The bank must also install an independent monitor to oversee its compliance with the settlement. The deal is similar to a $26bn settlement struck with five of the nation’s biggest banks in 2012.
It is not the first time that HSBC have been fined by the US, they were recently fined almost $2bn for a “blatant failure” to implement anti-money laundering controls and wilfully flouting US sanctions.
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