New York Attorney General Eric Schneiderman has sued HSBC for allegedly running afoul of state laws by preventing homeowners from negotiating loan modifications that might keep them from losing their homes.
Under New York state law, residential mortgage lenders attempting to foreclose on a home must participate in a settlement conference with the homeowner within 60 days. At this conference, the homeowners have the chance to negotiate foreclosure alternatives—including loan modifications—with the aim of keeping them in their homes.
HSBC, however, has often missed that 60-day deadline, sometimes stalling settlement conferences for more than two years, according to the lawsuit. These delaying tactics purportedly increase the chance that homeowners will lose their houses, since banks continue to charge interest, fees and penalties that make it harder for the owners to qualify for loan modifications later.
"Companies like HSBC are brazenly ignoring state law, leaving homeowners across New York stuck in a legal limbo where they can’t even get the legally required settlement conference that could help them keep their homes," Schneiderman said in a statement.
The state seeks to force HSBC to waive any extra fees or interest that accrue more than 60 days after the initial foreclosure filing, and also wants the bank to pay damages to homeowners who have been harmed by its allegedly illegal practices.
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