John Howard
HSBC Holdings PLC has agreed to pay $470 million to settle federal and state allegations of abusive practices in its US mortgage business.
The British bank will compensate some customers who lost their homes or had their loans modified. The bank must also make major changes to the way it services mortgages and handles foreclosures.
An independent monitor will oversee its compliance with the agreement for a one year period.
HSBC’s mortgage lending and servicing business, which authorities say was rife with problems and rushed people out of their homes, already paid $249 million in 2013 to settle similar allegations by the Federal Reserve and the Office of the Comptroller of the Currency.
The troubled bank, which recently announced a promotion freeze through 2017, has paid out billions of dollars in fines and settlements over the last several years.
Those fines include a $1.9 billion payment over failures in its systems that allegedly allowed drug traffickers and sanctioned nations to move money through its US bank.
Failure to run a clean operation is now causing the bank to spend an increasing amount on revenue on compliance costs.
In this most recent settlement violations allegedly occurred between 2008 and 2012 when many US homeowners struggled to keep up with their mortgage payments in the wake of the financial crisis.
HSBC isn’t the only bank to face such charges. US authorities have cracked down on allegedly abusive foreclosure procedures starting around 2010. Some US banks were found to be submitting bogus mortgage documents when attempting to repossess homes.
Five of the largest banks in the US paid a $25 billion settlement over similar allegations.
