WASHINGTON: Banking giant HSBC has reached a $470 million settlement with the federal government and nearly all states over mortgage lending and foreclosure abuses that officials say helped intensify the country’s economic meltdown, the Justice Department announced Friday.
The agreement requires the bank to pay $100m and to provide an additional $370m in consumer relief to borrowers and homeowners, including by reducing mortgage interest rates as well as the principal on mortgages for homeowners who are at risk of default.
The deal also requires the bank to improve standards for how it services loans and handles foreclosures.
Officials say those changes are intended to discourage past banking practices, such as robosigning and poor-quality loans, that exacerbated a financial crisis starting in 2007 in which millions of Americans lost their homes to foreclosure.
HSBC had already agreed in a separate 2013 deal with Federal Reserve and the Office of the Comptroller of the Currency to pay $249m to settle federal complaints that its US division wrongfully foreclosed on homeowners who should have been allowed to stay in their homes.
“This settlement illustrates the department’s continuing commitment to ensure responsible mortgage servicing,” Benjamin Mizer, head of the Justice Department’s Civil Division, said in a statement.
“The agreement is part of our ongoing effort to address root causes of the financial crisis.”
The settlement involves the departments of Justice and Housing and Urban Development, and the Consumer Financial Protection Bureau. Attorneys general from 49 states plus the District of Columbia signed on.
Published in Dawn, February 7th, 2016
Dear visitor, the comments section is undergoing an overhaul and will return soon.