Go to the Globe and Mail homepage

Jump to main navigationJump to main content

A view shows the entrance to a HSBC Bank branch in New York. (Shannon Stapleton/Reuters)
A view shows the entrance to a HSBC Bank branch in New York. (Shannon Stapleton/Reuters)

HSBC to pay $249-million to end U.S. foreclosure reviews Add to ...

The U.S. arm of HSBC Holdings PLC agreed to pay $249-million (U.S.) to end a case-by-case review of past home foreclosures in the United States, bringing the total payout by banks to resolve related issues to $9.3-billion.

HSBC agreed to pay $96-million to eligible borrowers who lost their homes to foreclosure in 2009 and 2010, and provide $153-million in other assistance, including loan modifications and forgiveness.

London-based HSBC said in a statement it was pleased to have reached the agreement and expects to record a pre-tax charge of $96-million in the fourth quarter of 2012 for the cash portion of the settlement. The bank said it expected to cover the loan assistance through existing reserves.

The settlement, with the Office of the Comptroller of the Currency and the Federal Reserve Board, is the 13th the agencies have reached this month.

They stem from reviews of individual loan files the regulators ordered in 2011 and 2012, after widespread mistakes were discovered in the way mortgage servicers had processed home seizures.

The reviews, initially expected to determine which borrowers were harmed and to compensate them based on their individual experiences, proved slow and expensive.

Ten banks, including Bank of America Corp., Wells Fargo & Co., Citigroup Inc., and JPMorgan Chase & Co., agreed to pay a total of $8.5-billion – some in cash, and the rest in loan assistance – to end the reviews last week.

On Wednesday, Goldman Sachs Group Inc. and Morgan Stanley agreed to a similar $557-million deal.

Around 112,000 borrowers whose homes were in foreclosure with HSBC Bank and other HSBC subsidiaries will receive some cash, regulators said.

Regulators said last week the payouts will be based on whether a borrower falls into one of 11 categories. The categories include whether the person was eligible for protections under the Servicemembers Civil Relief Act, whether the borrower was not in default, or whether he or she was denied a loan modification.

The Fed and OCC are expected to reach similar agreements with other servicers that had been asked to conduct the reviews, including Ally Financial Inc., EverBank Financial Corp. and OneWest Bank FSB.

The settlement come s a little over a month after HSBC agreed to pay a record $1.9-billion to resolve criminal charges that it let itself by used to drug cartels and others to launder illicit funds.

Next Story

In the know

Most popular videos »


More from The Globe and Mail

Most popular