HSBC fined $470m for abusive mortgage practices during 2008 crisis
Settlement with US Department of Justice centres on allegations that bank ‘robo-signed’ thousands of foreclosure documents without reviewing paperwork
HSBC has been fined $470m (£325m) for “abusive mortgage practices” in relation to the 2007-2009 housing crisis in which millions of people lost their homes.
The British bank on Friday agreed to pay the fine to settle US federal and state investigations into alleged abuses against homeowners struggling to keep up with mortgage payments during the 2008 global financial crisis.
“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,” New York attorney general Eric Schneiderman said in a statement. “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 “robo-signed” thousands of foreclosure documents – leading to evictions – without properly reviewing the paperwork.
As part of the fine, HSBC was ordered to pay $59.3m in compensation to borrowers who lost their homes between 2008 and 2012. The money might have to stretch very far, as there are more than 135,000 eligible borrowers in New York state alone.
Kathy Madison, chief executive of HSBC Finance Corp, 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 said that throughout the crisis HSBC had “stayed focused on home preservation and approached foreclosure as a last resort option”. “This agreement affirms our commitment to assisting customers who are facing financial difficulties,” she added.
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. About 7 million Americans lost their homes during the financial crisis.
It is the latest in a string of fines the US has brought against HSBC in recent years, including a $1.9bn fine for a “blatant failure” to implement anti-money laundering controls and wilfully flouting US sanctions.