HSBC Agrees $470 Million Settlement Over Alleged U.S. Mortgage Abuses
February 05 2016 - 10:59AM
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 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.
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.
The alleged abuses took place between 2008 and 2012 when many
U.S. homeowners struggled to keep up with their mortgage payments
in the wake of the financial crisis. Millions of people lost their
homes when a housing bubble inflated by loose lending popped in
2008.
U.S. authorities started cracking down on allegedly abusive
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.
Write to Margot Patrick at margot.patrick@wsj.com
(END) Dow Jones Newswires
February 05, 2016 11:44 ET (16:44 GMT)
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