HSBC will pay $249 million for bad mortgage practices

Federal regulators announced an agreement on Friday that requires one of the nation's largest banks to pay millions to mortgage borrowers over deficient foreclosures practices.  

HSBC will pay $249 million as part of a larger agreement with a dozen other financial institutions, the Federal Reserve and the Office of the Comptroller of the Currency (OCC) said. 

HSBC will pay $96 million in cash payments to eligible borrowers and $153 million in other assistance, such as loan modifications and forgiveness of deficiency judgments. 

On Jan. 7, the Fed and the OCC announced that they had reached agreements in principle with Aurora, Bank of America, Citibank, Goldman Sachs, JPMorgan Chase, MetLife Bank, Morgan Stanley, PNC, Sovereign, SunTrust, U.S. Bank and Wells Fargo.

With the addition of HSBC, nearly 4.2 million borrowers will receive a total of $3.6 billion in cash compensation while an additional $5.7 billion will be provided by the servicers for mortgage assistance.

More than 112,000 borrowers whose homes were in foreclosure in 2009 and 2010 with HSBC will receive cash compensation under the agreement in principle. 

Eligible borrowers are expected to receive compensation ranging from hundreds of dollars up to $125,000, depending on the type of possible servicer error.

On Wednesday, regulators announced that Goldman Sachs and Morgan Stanley will pay a combined $557 million to mortgage borrowers over their shoddy foreclosure practices. 

The settlements end a loan-by-loan independent review of mortgages that was required in 2011, which banks and consumers have argued were taking long for decisions to be made.