Problems seem to persist for
HSBC Holdings plc
) concerning the way it conducts its operations. The New York
Attorney General (AG) Eric Schneiderman has recently sued the
company for alleged violation of foreclosure laws.
While filing the case in a New York Supreme Court in Buffalo, the
AG accused HSBC of infringing the state's foreclosure law. The
particular law requires court-supervised settlement meetings to
be held within 60 days of filing for foreclosures. This process
provides homeowners with an opportunity to negotiate loan
modification, thereby leading to reduction in monthly payments.
The AG claimed that HSBC had failed to provide homeowners the
option to negotiate mortgage modifications, consequently leading
them to face foreclosure proceedings. The company allegedly
failed to file Request for Judicial Intervention forms related to
foreclosure for hundreds of cases for almost 2 years.
Further, HSBC continued to charge interest and fees, as well as
penalties from homeowners. This increased the debt amount for
homeowners, thus further lowering their chance of qualifying for
The AG seeks compensation for wronged homeowners and a
relinquishment of inappropriately accrued charges and fines from
HSBC. Further, the lawsuit demands the company to file documents
in a timely manner in the future.
The aforesaid lawsuit evinces the AG's scrutinized inspection of
mortgage servicers' foreclosure practices, following the $25
billion settlement deal announced last year between 49 AGs and 5
Bank of America Corporation
Wells Fargo & Company
JPMorgan Chase & Co.
), Ally Financial Inc. and Citigroup Inc. In May 2013, the New
York AG had declared his intention to sue Wells and BofA for
alleged violation of the terms of the National Mortgage
However, HSBC was not the part of this deal. In Jan 2013, the
company announced a separate foreclosure settlement deal with the
Office of the Comptroller of the Currency (OCC) and other U.S.
banking regulators. The company agreed to pay $249 million to
stop the review of wrongful foreclosures in the U.S.
Further, in Dec 2012, the company reached a settlement with
the U.S. law enforcement authorities in the money laundering case
and agreed to pay a penalty of $1.9 billion.
BANK OF AMER CP (BAC): Free Stock Analysis
HSBC HOLDINGS (HBC): Free Stock Analysis
JPMORGAN CHASE (JPM): Free Stock Analysis
WELLS FARGO-NEW (WFC): Free Stock Analysis
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We believe that such lawsuits and their impending settlements
will adversely impact HSBC's financials going forward. This could
lead to higher legal costs and exhaust the company's financials
HSBC currently carries a Zacks Rank #3 (Hold).