North Carolina consumers are set to receive a portion of the $470 million accord announced Friday with HSBC Holdings Plc to end U.S. probes into allegations of foreclosure abuses by the London-based financial services company.
The settlement resolves claims of abusive practices, such as robo-signing, that may have deprived struggling borrowers of opportunities to keep their homes. HSBC reached the settlement with the U.S. Department of Justice, federal housing and consumer protection regulators and 49 states, as well as the District of Columbia, according to a statement by New York Attorney General Eric Schneiderman.
North Carolina’s portion of the settlement includes loan modification relief and roughly $1.8 million in cash payments to approximately 2,194 North Carolinians who lost their homes to foreclosure, according to the office of N.C. Attorney General Roy Cooper.
“North Carolinians who take out mortgages deserve to be treated fairly by their lenders,” Cooper said in a statement. “This agreement brings direct relief for deserving homeowners and better protections for future borrowers.”
Sign Up and Save
Get six months of free digital access to The Charlotte Observer
The cash payments will go to eligible borrowers who had a mortgage serviced by HSBC. Eligible consumers must have experienced servicing abuses and lost their home to foreclosure between Jan. 1, 2008, and Dec. 31, 2012.
Cooper’s office did not immediately know how many Charlotte-area borrowers might be eligible for cash payments or other relief.
Former N.C. Banking Commissioner Joseph Smith will oversee HSBC’s compliance with the settlement, which closely resembles a landmark, $25 billion national mortgage accord struck in 2012 with some of the biggest mortgage servicers in the U.S., including Charlotte-based Bank of America and San Francisco-based Wells Fargo.
Smith also serves as monitor of the 2012 accord.
The HSBC settlement paves the way for smoother loan modifications and provides for payments to some borrowers for past foreclosure abuses, Schneiderman, the New York attorney general, said.
The bank will also be required to reform its practices, he said.
The settlement “will create tough new servicing standards that will ensure fair treatment for HSBC’s borrowers and provide relief to customers across New York State and across the country,” Schneiderman said.
The agreement follows a series of joint federal and state initiatives aimed at addressing the causes of the financial crisis that began in 2008 and helping to put the market back on track.
Previously, a separate federal-state working group reached multibillion-dollar settlements with lenders including Bank of America, Citigroup and JPMorgan Chase related to mortgage-backed securities.
State and federal officials also joined forces to tackle servicing issues by striking the 2012 deal with five companies over robo-signing and other foreclosure abuses, including the handling of documents. HSBC wasn’t part of that agreement.
Bloomberg News and staff writer Deon Roberts contributed.