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$470 Million State-Federal Settlement Reached with HSBC Page 1 of2
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Attorney General
Maura Healey
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MAURA HEALEY por immediate Release - February 05, 2016
ATTORNEY GENERAL
Media Contact
Jillian Fennimore
(617) 727-2543
$470 Million State-Federal Settlement Reached with HSBC Over
Unlawful Foreclosures, Loan Servicing
AG's Office Reaches Separate Agreement with HSBC that Provides Direct Relief to
Massachusetts Borrowers
BOSTON - A $470 million joint state-federal settlement has been reached with national mortgage lender and servicer
HSBC to address mortgage origination, servicing, and foreclosure abuses. Attorney General Maura Healey today
announced.
AG Healey joins 49 other states, the District of Columbia. U.S. Department of Justice (DOJ), U.S. Department of Housing
and Urban Development (HUD), and the Consumer Financial Protection Bureau (CFPB) in the consent judgment, filed
today in the U.S. District Court for the District of Columbia.
The settlement will provide direct payments to hundreds of borrowers in Massachusetts, along with rigorous mortgage
servicing standards and compliance oversight from an independent monitor.
The AG's Office has also reached a separate assurance of discontinuance, filed today in Suffolk Superior Court, which
addresses allegations that HBSC offered teaser interest rate reductions to Massachusetts borrowers that ultimately
increased the likelihood that they would lose their homes, violating HSBC's obligation to make a good faith effort to avoid
foreclosure. Under the terms of the agreement, HSBC will pay an additional $750,000 and provide relief to Massachusetts
homeowners for violation of the state's foreclosure law.
"Today's settlements hold HSBC accountable for its unlawful practices and provide immediate relief to struggling
Massachusetts borrowers who lost their homes or face foreclosure," AG Healey said. "With strict servicing standards in
place, HSBC will be required to ensure fairness and take critical steps to prevent past foreclosure abuses."
State-Federal Settlement
The mortgage servicing terms under today's multistate settlement largely mirror the 2012 historic national settlement
involving the nation's five largest mortgage servicers, which addressed unlawful foreclosures and unfair loan servicing
practices.
Of the $470 million, HSBC will pay $40.5 million to the federal agencies, and close to $60 million will be paid to the states
to be distributed to HSBC borrowers who lost their homes to foreclosure from Jan. 1, 2008 through Dec. 31, 2012. The
settlement also includes $370 million in consumer relief by HSBC nationwide, including items such as principal reduction
and refinancing for underwater mortgages.
It is estimated that nearly 1,000 Massachusetts borrowers who lost their homes to foreclosure will be eligible for monetary
payments. Borrowers will be contacted about how to apply for payments.
The settlement also includes new consumer protections that require HSBC to substantially change how it services
mortgage loans and handles foreclosures. The terms will prevent past abuses, such as robo-signing, improper
documentation and lost paperwork. An independent monitor will ensure mortgage servicer compliance.
Massachusetts Settlement
In a separate assurance of discontinuance reached with HSBC, the AG's Office alleges that HSBC violated a
Massachusetts foreclosure law. Section 35B of G.L. Chapter 244. This landmark law, passed in 2012, requires creditors to
make a good faith effort to avoid foreclosure for mortgage loans that were made with abusive subprime terms.
According to the AG's Office, HSBC violated this law by offering borrowers facing foreclosure temporary modifications that
did not consider the borrower's ability to repay the mortgage debt over the life of the loan. Borrowers often defaulted after
the temporary modification expired.
The settlement also resolves claims that HSBC unlawfully foreclosed on properties when they did not own the mortgages.
The AG's Office alleges that HSBC's unlawful conduct resulted in numerous void foreclosures affecting the marketability
and insurability of the titles.
Under the terms of the settlement, HSBC will pay a total of $750,000 to the Commonwealth, provide permanent loan
modification relief as required by state law to eligible borrowers, and facilitate cures of title issues resulting from unlawful
foreclosures.
App. 414
http://www.mass.gov/ago/news-and-updates/press-releases/2016/470-niillion-state-federal-s... 8/5/2016