HSBC will pay $470M to settle mortgage, foreclosure abuses

HSBC will pay $470M to settle mortgage, foreclosure abuses
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HSBC has agreed to pay a $470 million joint federal and state settlement to address mortgage origination, servicing and foreclosure abuses, the Department of Justice announced Friday.

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Of the $470 million, $59.3 million will go into an escrow fund administered by the 49 states that took action against the bank to pay back borrowers who lost their homes to foreclosure between 2008 and 2012; $200,000 will be paid into an escrow fund to reimburse the state attorneys general for investigation costs; and $40.5 million will go to pay federal fines.

By July, the DOJ said, the banking and financial services company will have paid $370 million in creditable consumer relief directly to borrowers and homeowners by reducing the principal on mortgages for borrowers who are at risk of default, reducing mortgage interest rates and forgiving forbearances.

“Mortgage servicers have a responsibility to help struggling borrowers remain in their home, not to push them into foreclosure,”  Helen Kanovsky, general counsel of the U.S. Department of Housing and Urban Development, said in a statement. “This agreement is another example of how multiple agencies in the federal government and state attorneys general across the country are working to make sure the mortgage industry treats consumers fairly.”