HSBC Agrees $470 Million Settlement Over Alleged U.S. Mortgage Abuses
HSBC Holdings PLC agreed Friday to pay $470 million to settle federal and state allegations of abusive practices in its U.S. mortgage business.The British bank must make major changes to how it services mortgages and handles foreclosures in the U.S. and will compensate some customers who lost their homes or had their loans modified. An independent monitor will oversee its compliance with the agreement for a year.
The civil settlement with the Justice Department, other federal agencies and U.S. states adds to a list of penalties around HSBC's mortgage lending and servicing business, which authorities say was rife with problems and rushed people out of their homes. HSBC paid $249 million in 2013 to settle similar allegations by the Federal Reserve and the Office of the Comptroller of the Currency.
HSBC, across its operations, has paid out billions of dollars in fines and settlements in the past several years, including $1.9 billion over failures in its systems that allegedly allowed drug traffickers and sanctioned nations to move money through its U.S. bank. The settlements have weighed on the bank's earnings and helped jack up its compliance costs.
The alleged abuses took place between 2008 and 2012 when many U.S. homeowners struggled to keep up with their mortgage payments in the wake of the financial crisis. Millions of people lost their homes when a housing bubble inflated by loose lending popped in 2008.
U.S. authorities started cracking down on allegedly abusive foreclosure procedures around 2010, after some banks were found to be serially submitting bogus mortgage documents when attempting to repossess homes. The same federal agencies and states entered a $25 billion settlement over similar allegations with five large U.S. banks in 2012.
