AUSTIN – On Feb. 5 Texas Attorney General Ken Paxton announced a $470 million joint state-federal settlement with lender HSBC to address mortgage origination, servicing and foreclosure abuses.
According to a press release, the settlement provides direct payments to Texas borrowers for past foreclosure abuses; loan modifications and other relief for borrowers in need of assistance; institutes rigorous mortgage servicing standards, and grants oversight authority to an independent monitor.
“This settlement holds HSBC accountable for its past abusive practices, and it provides much-needed relief to Texas borrowers,” said Paxton. “Through its tough servicing standards, this agreement compels HSBC to treat its borrowers much more fairly in the future.”
The settlement includes Texas and 49 other states, the District of Columbia, the U.S. Department of Justice, the U.S. Department of Housing and Urban Development, and the Consumer Financial Protection Bureau.
The terms will prevent past foreclosure abuses, such as robo-signing, improper documentation and lost paperwork, the press release states.
The settlement’s consumer protections and standards include:
• Making foreclosure a last resort by first requiring HSBC to evaluate homeowners for other loss mitigation options;
• Restricting foreclosure while the homeowner is being considered for a loan modification;
• Procedures and timelines for reviewing loan modification applications;
• Giving homeowners the right to appeal denials; and
• Requiring a single point of contact for borrowers seeking information about their loans and maintaining adequate staff to handle calls.
In Texas, approximately 2511 borrowers will be eligible for payment. These are borrowers whose loans were serviced by HSBC and who lost their home to foreclosure from Jan. 1, 2008, through Dec. 31, 2012, and encountered servicing abuses.
They will be eligible for a payment from the national $59.3 million fund. The borrower payment amount will depend on how many borrowers file claims.
Eligible borrowers will be contacted about how to qualify for payments.
The agreement has been filed as a consent judgment in the U.S. District Court for the District of Columbia.