March 2016 - RIP Dodd Frank

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50 | TH E M R EP O RT O R I G I NAT I O N S E R V I C I N G A NA LY T I C S S E C O N DA R Y M A R K E T SERVICING THE LATEST HSBC Agrees to Settle Abuse Claims The bank consented to pay a bevy of state and federal agencies $470 million to resolve the mortgage-related allegations. T he Department of Justice (DOJ) announced that HSBC Bank has reached a settlement with several federal agencies and almost every state attorney general regarding "mortgage origination, servicing, and foreclosure abuses." HUD, the Consumer Financial Protection Bureau, and 49 state attorneys general and the District of Columbia's attorney general were all other parties involved in the settlement. According to the DOJ, HSBC has agreed to pay $470 million in consumer relief and payments to federal and state parties and will now be bound to mortgage ser - vicing standards and be subject to independent monitoring of its compliance with the agreement. "This agreement is the result of a coordinated effort between federal and state partners to hold HSBC accountable for abusive mortgage practices," said Acting Associate Attorney General Stuart F. Delery. "The Department of Justice remains committed to rooting out finan - cial fraud and holding bad actors accountable for their actions." Principal Deputy Assistant Attorney General Benjamin C. Mizer, head of the Justice Department's Civil Division, noted," This settlement illustrates the department's continuing commitment to ensure respon - sible mortgage servicing. The agreement is part of our ongoing effort to address root causes of the financial crisis." "Even as the mortgage cri - sis recedes, the U.S. Trustee Program will continue to combat mortgage servicer abuse of the federal bankruptcy laws so that homeowners are given their legal right to try to save their homes," said Director Cliff White of the Justice Department's U.S. Trustee Program. "Homeowners in finan - cial distress sometimes depend on Chapter 13 bankruptcy to help them catch up on their payments. When banks violate bankruptcy laws at the expense of homeowners and other credi - tors, they must pay a price. This settlement holds HSBC account- able for its actions and helps to protect the most vulnerable homeowners." The Federal Reserve also hit HSBC with a $131 million penalty "for deficiencies in resi - dential mortgage loan servicing and foreclosure processing," ac- cording to a separate, but related, announcement on its site. The Fed said that the penalty reviewed HSBC's "unsafe and unsound practices and fore - closure activities" and can be resolved by "providing borrower assistance or remediation in con- junction with the Department of Justice settlement or by provid- ing funding for nonprofit hous- ing counseling organizations." If HSBC does not satisfy the full penalty amount within two years, the remaining amount must be paid to the U.S. Department of Treasury, the Fed noted. HSBC was not immediately available for comment at the time of publication. According to the DOJ, under the terms of the agreement in the settlement, HSBC is required to: • Pay $100 million: $40.5 million to be paid to the settling federal parties; $59.3 million to be paid into an escrow fund admin - istered by the states to make payments to borrowers who lost their homes to foreclosure between 2008 and 2012; and $200,000 to be paid into an escrow fund to reimburse the state attorneys general for inves - tigation costs.

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