LITTLE ROCK – February 8, 2016 – (RealEstateRama) — Arkansas Attorney General Leslie Rutledge along with 49 other states, the District of Columbia, the U.S. Department of Justice, the U.S. Department of Housing and Urban Development and the Consumer Financial Protection Bureau reached a $470 million joint state-federal settlement today with mortgage lender and servicer HSBC to address mortgage origination, servicing and foreclosure abuses.
“Arkansans who were taken advantage of by the foreclosure abuses and loan modifications of HSBC are eligible for direct payments under this settlement,” said Attorney General Rutledge. “HSBC is being held accountable for the way it treated its borrowers, and the agreement requires HSBC to reform its ways and protect borrowers in future transactions.”
The agreement’s mortgage servicing terms largely mirrors the 2012 National Mortgage Settlement reached in February 2012 between the federal government, 49 state attorneys general, including Arkansas and the five largest national mortgage servicers. That agreement provided consumers nationwide with more than $50 billion in direct relief, created new servicing standards, and implemented independent oversight.
A subsequent state-federal agreement with SunTrust Mortgage Inc. worth nearly $1 billion was announced in June 2014.
The HSBC agreement requires the company to provide certain Arkansas borrowers with loan modifications or other relief. The modifications, which HSBC will choose through an extensive list of options, include principal reductions and refinancing for underwater mortgages. HSBC decides how many loans and which loans to modify, but must meet certain minimum targets. Because HSBC receives only partial settlement credit for many types of loan modifications, the settlement will provide relief to borrowers that will exceed the overall minimum amount.
Approximately 700 eligible Arkansas borrowers whose loans were serviced by HSBC and who lost their home to foreclosure from January 1, 2008 through December 31, 2012 and encountered servicing abuse will be eligible for a payment from the national $59.3 million fund for payments to borrowers. The borrower payment amount will depend on how many borrowers file claims.
Eligible borrowers will be contacted about how to qualify for payments.
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 past foreclosure abuses, such as robo-signing, improper documentation and lost paperwork.
The settlement’s consumer protections and standards include:
- Making foreclosure a last resort by first requiring HSBC to evaluate homeowners for other loss mitigation options.
- Restricting foreclosure while the homeowner is being considered for a loan modification.
- Procedures and timelines for reviewing loan modification applications.
- Giving homeowners the right to appeal denials.
- Requiring a single point of contact for borrowers seeking information about their loans and maintaining adequate staff to handle calls.
The agreement resolves potential violations of civil law based on HSBC’s deficient mortgage loan origination and servicing activities. The agreement does not prevent state or federal authorities from pursuing criminal enforcement actions related to this or other conduct by HSBC or 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.
For loans serviced by HSBC Bank USA, N.A., inquiries should be addressed to 1-866-435-7085 or the consumer’s case manager. For loans serviced by HSBC Mortgage Services, Household Finance or Beneficial, inquiries should be addressed to 1-800-333-7023 or the consumer’s single point of contact.
About Attorney General Leslie Rutledge
Leslie Carol Rutledge is the 56th Attorney General of Arkansas. Elected on Nov. 4, 2014, she is the first woman and first Republican in Arkansas history to be elected to the office.
Rutledge, a native of Batesville, Arkansas, is a graduate of Southside High School, the University of Arkansas in Fayetteville and the University of Arkansas at Little Rock William H. Bowen School of Law. She began her legal career as Clerk for Arkansas Court of Appeals Judge Josephine Hart, now Associate Justice on the Arkansas Supreme Court. She was appointed Deputy Counsel for Arkansas Governor Mike Huckabee and later served as Legal Counsel on the Mike Huckabee for President Campaign. She served as a Deputy Prosecuting Attorney in Lonoke County and in subsequent service as Attorney for the State of Arkansas’s Division of Children and Family Services. She also served as Deputy Counsel at the National Republican Congressional Committee before joining the Republican National Committee as Counsel. Prior to her election as Attorney General, she founded and practiced law at The Rutledge Firm, PLLC. Rutledge lives in Little Rock.