TALLAHASSEE, Fla. – February 8, 2016 – (RealEstateRama) — Attorney General Pam Bondi today announced a $470 million joint state-federal settlement with HSBC to address mortgage origination, servicing and foreclosure abuses. The settlement with the mortgage lender and servicer provides direct payments to Florida borrowers for past foreclosure abuses and requires the company to provide loan modifications and other consumer relief. In addition to Florida, 48 other states, the District of Columbia, the U.S. Department of Justice, the U.S. Department of Housing and Urban Development and the Consumer Financial Protection Bureau are participants in the agreement.
Approximately 6,400 Florida borrowers will be eligible for a payment from the national $59.3 million fund. Eligible HSBC borrowers must have lost a home to foreclosure from Jan. 1, 2008–Dec. 31, 2012, and encountered servicing abuse. The payment amount will depend on how many borrowers file a claim. Eligible borrowers will be contacted about how to apply for a payment.
The settlement also requires HSBC to substantially change how it services mortgage loans, handles foreclosures and ensures the accuracy of information provided in federal bankruptcy court. The terms will help prevent past foreclosure abuses, such as robo-signing, improper documentation and lost paperwork.
The settlement imposes numerous consumer protections and standards including:
· Making foreclosure a last resort by first requiring HSBC to evaluate homeowners for other loss mitigation options;
· Restricting foreclosure while the homeowner is being considered for a loan modification;
· Providing new procedures and timelines for reviewing loan modification applications;
· Giving homeowners the right to appeal denials of loan modifications; and
· Requiring a single point of contact for borrowers seeking information about their loans and maintaining adequate staff to handle calls.
For one year, the National Mortgage Settlement’s independent monitor will oversee HSBC agreement compliance. The oversight includes overseeing implementation of the servicing standards required by the agreement and issuing public reports that identify whether HSBC complied with or fell short of the standards imposed by the settlement.
The agreement also resolves potential violations of civil law based on HSBC’s deficient mortgage loan origination and servicing activities. The agreement does not prevent state or federal authorities from pursuing criminal enforcement actions related to HSBC’s conduct, or from punishing wrongful securitization conduct that is the focus of the Residential Mortgage-Backed Securities Working Group. Additionally, the agreement does not prevent any action by individual borrowers who wish to bring their own lawsuits.
The agreement will be filed as a consent judgment in the U.S. District Court for the District of Columbia.
The agreement’s mortgage servicing terms largely mirrors the National Mortgage Settlement reached in February 2012 between the federal government, Attorney General Bondi, 48 other state attorneys general and the five largest national mortgage servicers. The National Mortgage Settlement provided consumers nationwide with more than $50 billion in direct relief, created tough new servicing standards and implemented independent oversight. In June 2014, participants announced a subsequent state-federal agreement with SunTrust Mortgage Inc. worth close to $1 billion.
