New York AG to Sue HSBC Over Foreclosures

Adam Jeffery | CNBC

The state of New York plans to sue HSBC Holdings for allegedly ignoring a law designed to protect struggling homeowners from being thrown into foreclosure without getting a chance to renegotiate their mortgages.

The lawsuit being filed by state Attorney General Eric Schneiderman in Buffalo, accuses HSBC of disregarding a state law that requires lenders to make a "request for judicial intervention" when they began a foreclosure.

That process requires a settlement conference to be held within 60 days to allow homeowners to negotiate an alternative to foreclosure.

"Companies like HSBC are brazenly ignoring state law, leaving homeowners across New York stuck in a legal limbo where they can't even get the legally required settlement conference that could help them keep their homes," Schneiderman said in a statement.

Neal McGarity, an HSBC spokesman, declined to comment. A copy of the complaint was not immediately available.

Schneiderman is suing a month after he announced plans to sue Bank of America and Wells Fargo for allegedly violating terms of a $25 billion nationwide settlement over mortgage servicing abuses by failing to meet a timeline for processing mortgage modification applications.

That settlement covered five major banks, but did not include HSBC.

Schneiderman said his probe showed that HSBC was too slow to file paperwork in some 300 foreclosures in four New York counties. He said some paperwork was filed two years late, during which HSBC would charge interest, fees and penalties.

_ By Reuters