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We may incur additional costs and expenses in ensuring that we satisfy requirements relating to our mortgage foreclosure processes and the industry-wide delay in processing foreclosures may have a significant impact upon loss severity. State and federal officials are investigating the procedures followed by mortgage servicing companies and banks, including HSBC Finance Corporation and certain of our affiliates, relating to foreclosures. We and our affiliates have responded to all related inquiries and cooperated with all applicable investigations, including a joint examination by staffs of the Federal Reserve and the OCC as part of their broad horizontal review of industry foreclosure practices. Following the examination, the Federal Reserve issued a supervisory letter to HSBC Finance Corporation and HSBC North America noting certain deficiencies in the processing, preparation and signing of affidavits and other documents supporting foreclosures and in governance of and resources devoted to our foreclosure processes, including the evaluation and monitoring of third party law firms retained to effect our foreclosures. Certain other processes were deemed adequate. The OCC issued a similar supervisory letter to HSBC Bank USA. We have suspended foreclosures until such time as we have substantially addressed the noted deficiencies in our processes. We are also reviewing foreclosures where judgment has not yet been entered and will correct deficient documentation and re-file affidavits where necessary.
We and our affiliates are engaged in discussions with the Federal Reserve and the OCC regarding the terms of consent cease and desist orders, which will prescribe actions to address the deficiencies noted in the joint examination. We expect the consent orders will be finalized shortly after the date this Form 10-K is filed. While the impact of the Federal Reserve consent order on HSBC Finance Corporation depends on the final terms, we believe it has the potential to increase our operational, reputational and legal risk profiles and expect implementation of its provisions will require significant financial and managerial resources. In addition, the consent orders will not preclude further actions against HSBC Finance Corporation or our affiliates by bank regulatory or other agencies, including the imposition of fines and civil money penalties. We are unable at this time, however, to determine the likelihood of any further action or the amount of penalties or fines, if any, that may be imposed by the regulators or agencies.
We expect to incur additional costs and expenses in connection with the correction or affirmation of previously filed foreclosure paperwork and the resulting delays in foreclosures, including costs associated with the maintenance of properties while foreclosures are delayed, legal expenses associated with re-filing documents or, as necessary, re-filing foreclosure cases, and costs associated with fluctuations in home prices while foreclosures are delayed. These costs could increase depending on the length of the delay. In addition, we may incur additional costs and expenses as a result of legislative, administrative or regulatory investigations or actions relating to our foreclosure processes or with respect to the mortgage servicing industry in general. We may also see an increase in private litigation concerning our practices. However, it is not possible at this time to predict the ultimate outcome of these matters or the impact that they will have on our financial results.
Due to the significant slow-down in foreclosures, and in some instances, cessation of all foreclosure processing by numerous loan servicers, including us, for some period of time in 2011 there may be some reduction in the number of properties being marketed following foreclosure. The impact of that decrease may increase demand for properties currently on the market resulting in a stabilization of home prices but could also result in a larger number of vacant properties in communities creating downward pressure on general property values. As a result, the short term impact of the foreclosure processing delay is highly uncertain. However, the longer term impact is even more uncertain as eventually servicers will again begin to foreclose and market properties in large numbers which is likely to create a significant over-supply of housing inventory. This could lead to a significant increase in loss severity on REO properties.
The entire 10K report can be read here…
Well, that’s a pretty dramatic reversal from their stance from just a few months ago, when they said publicly that they would not suspend home seizures because they didn’t feel their procedures were compromised by so-called “robo-signers” and felonous court affidavits.
HSBC CEO Irene Dorner, October 2010: “We have looked. We don’t have robo-signers,” HSBC has not suspended foreclosures and “we don’t believe we have a reason to do so,” she said.
Now where are the damn handcuffs???
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my country tis of thee…
That made me cry.
We need to bring this website (www.4closurefraud.org) to the attention of all 50 states’ Attorneys General, so that they can see the vast scope of the problem and that the foreclosures are NOT due to “deadbeat borrowers”. Any good ideas on HOW best to do that, to get the Attorneys General to READ the articles on this site? I will do my best to notify North Carolina’s, any volunteers for the other states?
The lenders and banks need to SUFFER, not just get hit with a slap-on-the-wrist fine. They need to have to SLAVE just as hard to straighten out the mess as borrowers have had to do to just try to save their homes and keep their lives together.
The bankers and lenders need to have the very same extra, extensive expenses and losses as borrowers have had in excessive, arbitrary fees paid to the mortgage servicers to stop foreclosure or to hire an attorney to fight back. The bankers know most homeowners do not have the money to hire an attorney, if they can even find one willing to take it on, and many homeowners do not know how to fight back or where to turn.
The bankers and lenders need to suffer the equivalent worry, stress, doing without, even going hungry in many cases, or having to accept public assistance, as the borrowers they have harmed, having robbed the borrowers of all savings, retirement accounts, etc., and having bled them dry, as the borrowers just tried to save their homes in order to not LOSE all the enormous sums that they had ALREADY paid on their mortgages for years. The bankers and lenders who caused all this indeed should NOT be allowed off the hook or to sleep at night, until they have had to truly sweat over it, cry, be frustrated, have sleeplessness, loss, despair, hopelessness, fear of being cast out into the street, and total disruption to their lives and family relationships just like the affected borrowers have had.
Most, if not almost all, of these borrowers in trouble financially and with their mortgages were caught up in the predatory greed practices of these corporate banks and mortgage lenders. These borrowers were even targeted ahead of time by the banks and lenders in many cases and have been discriminated against too.
The bankers and lenders need to have to endure the very same seemingly endless, unreasonable agonies as all the borrowers that have been harmed by their unbridled corporate greed. Please help me if you can to see to it that the bankers and lenders have to do exactly that, if you feel the same as I do about it.
Let your state Attorney General know about this website, and your state and U.S. Congressional Representatives and Senators. Let them know that if they continue to back up these corporate greed practices, and if they let the banks and lenders get away with this without serious punishment, that they will be considered in collusion with these practices. Let them know that it will be exposed in the next election, and may have some political consequences to them, too.
My country tis of thee, sweet land of liberty, of thee I see. Land where our fathers died, land of the pilgrims pride, from every mountain side, let freedom ring.