OCC and Federal Reserve Reach Agreement with HSBC to Provide $249 Million in Payments and Assistance
WASHINGTON — HSBC has joined the agreement in principle announced by the Federal Reserve Board and Office of the Comptroller of the Currency (OCC) on January 7, 2013, and will pay $249 million in cash payments and other assistance to help mortgage borrowers.
Earlier this month, the Federal Reserve 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. Like the other institutions, HSBC is subject to enforcement actions for deficient practices in mortgage loan servicing and foreclosure processing. 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.
The sums paid by HSBC include $96 million in direct payments to eligible borrowers and $153 million in other assistance, such as loan modifications and forgiveness of deficiency judgments. More than 112,000 borrowers whose homes were in foreclosure in 2009 and 2010 with HSBC Bank and nonbank subsidiaries of 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.
A payment agent will be appointed to administer payments to borrowers on behalf of the servicers. Eligible borrowers are expected to be contacted by the payment agent by the end of March with payment details. Borrowers will not be required to execute a waiver of any legal claims they may have against their servicer as a condition for receiving payment. In addition, the servicers’ internal complaint process will remain available to borrowers.
The Federal Reserve and the OCC continue to work to reach similar agreements in principle with other servicers that are not yet parties to the agreements, but that are also subject to enforcement actions for deficient practices in mortgage loan servicing and foreclosure processing. Examiners from the agencies are continuing to closely monitor the servicers’ implementation of plans required by the enforcement actions previously issued against the servicers to correct the unsafe and unsound mortgage servicing and foreclosure practices.