HSBC sued by New York over foreclosure abuses

Tue Jun 4, 2013 1:08pm EDT
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By Neale Gulley and Jonathan Stempel

BUFFALO, N.Y./NEW YORK (Reuters) - New York state sued HSBC Holdings Plc (HSBA.L: Quote) for ignoring a law designed to protect struggling homeowners from being thrown into foreclosure without getting a chance to renegotiate their mortgages.

The lawsuit filed by Attorney General Eric Schneiderman accuses Europe's largest bank of letting foreclosure cases languish by ignoring a state law intended to give homeowners a chance to negotiate loan modifications.

Schneiderman said such delays have trapped as many as 25,000 homeowners in a "shadow docket" of foreclosure cases backlogged as long as 2-1/2 years, causing them to rack up thousands of dollars of needless interest, fees and penalties.

"Mick Jagger was wrong. If you're a homeowner, time is not on your side," Schneiderman said at a news conference, referencing the 1964 Rolling Stones hit "Time is On My Side."

Neal McGarity, an HSBC spokesman, declined to comment.

The lawsuit was filed on Monday in a New York state court in Buffalo and made public on Tuesday.

It accuses HSBC of regularly ignoring a state law requiring lenders to file paperwork, known as a request for judicial intervention, which entitles homeowners to settlement conferences within 60 days to negotiate loan modifications.

He said a sampling showed that since 2010 HSBC has been too slow to file required paperwork in 297 cases in the counties of The Bronx, Erie, Monroe and Suffolk, and that thousands of similar cases may exist in 58 other counties in the state.   Continued...

The logo of HSBC bank is seen at its office in the Canary Wharf business district of London April 1, 2013. REUTERS/Chris Helgren