HSBC will pay $249 million to settle botched U.S. foreclosures

January 18, 2013 09:42 AM

HSBC Holdings Inc. has signed a $249 million accord to settle claims of improper U.S. foreclosures, joining 12 other mortgage servicers in a deal that now exceeds $9 billion, according to banking regulators.

Europe’s largest bank agreed with the Federal Reserve and the Office of the Comptroller of the Currency to pay $96 million in cash to 112,000 U.S. borrowers it foreclosed on in 2009 and 2010 and provide $153 million in other mortgage help, according to a statement by the Fed and OCC today. HSBC was among lenders accused of rushing home foreclosures by using flawed documents.

Ten of the largest U.S. mortgage servicers, including JPMorgan Chase & Co., Bank of America Corp. and Citigroup Inc., agreed to an $8.5 billion settlement with the Fed and the Office of the Comptroller of the Currency on Jan. 7. This week, Goldman Sachs Group Inc. and Morgan Stanley joined the deal with the Fed, ending their faulty foreclosure history with a $557 million package of cash and other assistance.

After a U.S. housing-market collapse started the worst U.S. financial crisis since the Great Depression, mortgage servicers were accused of engaging in improper foreclosure practices, including so-called robo-signing of documents. In almost two years since regulators ordered the largest U.S. mortgage servicers to hire independent consultants to review foreclosures, none of the borrowers has yet received compensation.

Mortgage servicers handle billing and collections and oversee foreclosures if borrowers default.

Bloomberg News

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