About 400 people in Nebraska and 638 in Iowa qualify for payments or other assistance provided by a $470 million national settlement involving HSBC Holdings Plc., state attorneys general and federal authorities.
Payments likely will cover only a fraction of the losses that the mortgage borrowers suffered because of HSBC’s abusive foreclosure, loan servicing and customer service practices, said Abigail Stempson, chief of the Nebraska attorney general’s public protection bureau and consumer protection division.
“In no way is it going to get your $150,000 mortgage back,” Stempson said Friday.
HSBC, based in London, used such practices as “robo-signing” — automatically foreclosing on loans without reviewing each case’s circumstances — leading to allegations it did not service loan customers fairly.
The amount received by each person will depend on how many of the thousands of people affected by HSBC’s practices file claims, according to Nebraska Attorney General Doug Peterson and Iowa Attorney General Tom Miller.
The deal provides direct payments, loan modifications and other assistance and sets up an independent monitor to oversee HSBC’s lending and loan servicing practices, they said.
The loan modifications may include reducing the principal amount and refinancing. The borrowers had their loans serviced by HSBC and lost their homes to foreclosure between Jan. 1, 2008, and Dec. 31, 2012. The payments will come from a $59.3 million national fund that is part of the $470 million.
The attorneys general’s offices will contact the eligible people about how to qualify for payments.
The settlement also calls for HSBC to change how it services its loans, handles foreclosures and ensures the accuracy of information on mortgages.
The HSBC agreement is part of a $50 billion national mortgage settlement reached in 2012 among the states, the federal government and the five largest mortgage servicers, including HSBC.
HSBC paid $249 million in 2013 to settle similar allegations by the Federal Reserve and the Office of the Comptroller of the Currency, and has paid $1.9 billion in fines from allegations that drug traffickers and others laundered money through its U.S. bank.
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