New York AG Sues HSBC, Alleging Failure to Follow Foreclosure Law

New York AG Sues HSBC, Alleging Failure to Follow Foreclosure Law

06/04/2013 BY: ESTHER CHO

HSBC  faces a lawsuit from New York Attorney General Eric T. Schneiderman, who accused the bank of failing to follow a state foreclosure law that mandates a settlement conference for past due borrowers.

In a statement Tuesday, Schneiderman announced he filed a lawsuit against HSBC Bank and HSBC Mortgage Corporation, alleging HSBC repeatedly failed to file a Request for Judicial Intervention (RJI) in a timely manner in hundreds of foreclosure cases.

After filing an RJI, lenders are required to attend a settlement conference within 60 days to provide an opportunity for borrowers to negotiate alternatives to foreclosure, including loan modifications.

According to Schneiderman, delays in filing the RJI increase the risk that homeowners will lose their home and leads to a backlog of foreclosure cases.

“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,” said Attorney General Schneiderman. “For homeowners facing foreclosure, time is their greatest enemy. Every day spent waiting for a settlement conference is a day that the lender piles on additional interest, fees and penalties and the homeowner falls further behind.”

According to the statement, the investigation from the attorney general’s office resulted in the identification of nearly 300 instances of delayed RJI filings in four New York counties— Erie, Monroe, Suffolk and Bronx. In some cases, the office says homeowners waited for two years for the bank to file the RJI.

According to first quarter data from RealtyTrac, New York has the longest foreclosure timeline out of any other state at 1,049 days.

“Although identifying these cases takes significant resources, my office will continue to bring these types of cases until every homeowner in the shadow docket receives the relief they are legally entitled to,” added Schneiderman.

In an emailed statement to DSNews, an HSBC spokesperson said, “HSBC is committed to compliance with all applicable laws, which includes those related to foreclosure. We will respond appropriately to the State AG in this matter.”

 

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