JEFFERSON CITY, Mo—Attorney General Chris Koster today announced a settlement with HSBC, a mortgage lender and servicer, which will implement loan modifications as well as payments to more than 2,600 Missouri borrowers who have lost their homes due to foreclosure.
According to the release, the settlement includes Missouri and 48 other states, the District of Columbia, the U.S. Department of Justice (DOJ), the U.S. Department of Housing and Urban Development (HUD), and the Consumer Financial Protection Bureau (CFPB).
Koster made the following statement contained in today’s announcement:
“While nothing can make up for the pain of losing a family home, this settlement requires HSBC to provide $59 million in assistance to borrowers who suffered foreclosures and loan modifications so others can remain in their homes,” Koster said. “In addition, this settlement places strict new standards on HSBC to treat future borrowers fairly.”
Details of the settlement provisions include:
Loan Modifications: The HSBC agreement requires the company to provide certain Missouri borrowers with loan modifications or other relief. The modifications may include principal reductions and refinancing for underwater mortgages. HSBC must meet certain minimum targets in identifying the loans eligible for modification.
Payments to Borrowers: Approximately 2,671 eligible Missouri borrowers who lost their home to foreclosure from January 1, 2008 through December 31, 2012 and encountered servicing abuses by HSBC will be eligible for a payment from the national $59.3 million fund. The borrower payment amount will depend on the total amount of borrowers filing claims. The settlement administrator or the Missouri Attorney General’s office will arrange for eligible borrowers to be contacted about how to apply for payments.
Mortgage Servicing Standards: The settlement requires HSBC to substantially change how it services mortgage loans, handles foreclosures, and ensures the accuracy of information provided in federal bankruptcy court. The terms will prevent foreclosure abuses, such as robo-signing, improper documentation and lost paperwork.
Independent Monitor: The National Mortgage Settlement’s independent monitor, Joseph A. Smith Jr., will oversee HSBC agreement compliance for one year. Smith served as the North Carolina Commissioner of Banks from 2002 until 2012, and is also the former Chairman of the Conference of State Banks Supervisors (CSBS). Smith will oversee implementation of the servicing standards required by the agreement and issue public reports that identify whether HSBC complied or fell short of the standards imposed by the settlement. If HSBC is alleged to have violated terms of the agreement, the states and federal agencies can seek relief through the court.
Additional Terms: The agreement does not prevent state or federal authorities from punishing wrongful securitization conduct that is the focus of the Residential Mortgage-Backed Securities Working Group. Additionally, the agreement does not prevent any action by individual borrowers who wish to bring their own lawsuits.
The agreement will be filed as a consent judgment in the U.S. District Court for the District of Columbia.