HSBC Fined $470 Million For Mortgage Malpractices In 2008
Global banking giant HSBC has been fined $470 million by U.S. authorities for its abusive practices in its mortgage business during the 2007-2009 housing crisis.
HSBC has agreed to pay the fines in order to settle government investigations into its alleged misconduct against homeowners who were having trouble with their mortgage payments during the financial crisis.
The settlement was between the bank and a number of U.S. federal and state authorities that included the U.S. Department of Justice, attorneys general from 49 states, the District of Columbia, the Housing and Urban Development and the Consumer Financial Protection Bureau.
In a statement, Eric Schneiderman New York Attorney General said,
There has to be one set of rules for everyone, no matter how rich or how powerful, and that includes lenders who engage in abusive business practices. The settlement announced today is a joint partnership that will create tough new servicing standards that will ensure fair treatment for HSBC’s borrowers and provide relief to customers across New York State and across the country.
HSBC has been charged with allegations of several irregular practices including robo-signing foreclosure notices in many thousands of cases without reviewing related documents, leading to evictions.
Kathy Madsion, chief executive of HSBC Finance Corp has said that that this positive result will help American homeowners as well as the U.S housing industry. She also added that HSBC has always been focused on ensuring the preservation of the houses of its borrowers, initiating foreclosures only after exhausting all other options.
As a part of the settlement, HSBC will have to change its policies and practices and install new measures to prevent further such abuses like giving home owners an opportunity to initiate a process of appealing foreclosures. The settlement also requires the bank to appoint an independent auditor who will ensure the bank’s compliance with the specified and stated terms.
In 2012, five major U.S banks – JPMorgan Chase, Bank of America, Citigroup, Wells Fargo and Ally Financial had agreed to pay a combined settlement of $26 billion in a similar agreement.
The 2007-2009 crises resulted in around 7 million Americans losing their homes. Widespread malpractices in home loans were an important reason for the sub-prime crisis that caused the collapse of the U.S housing market in 2006, which snowballed into a global recession.
This latest penalty on HSBC is among the many fines that U.S authorities have levied on the bank in recent times, including a fine of $1.9 billion after being found guilty of not implementing anti-money laundering controls.
