HSBC to pay $10 million, accept responsibility in foreclosure lawsuit

by Ryan Smith02 Jul 2014
HSBC has agreed to pay $10 million to settle fraud claims related to foreclosure charges submitted to the government.

The settlement resolves government allegations that HSBC didn’t properly review fees and charges submitted to the bank by third-party providers – fees HSBC then passed on to Fannie Mae and the Federal Housing Administration.

“HSBC failed to live up to its legal obligation to monitor and review fees and expenses it was submitting to FHA and Fannie Mae for reimbursement, and in the process, cost the public millions of dollars,” said US Attorney Preet Bharara. “With today’s settlement, HSBC publicly admits to its failures and agrees to pay the government $10 million. Civil actions like these serve as an important tool that our office can and will continue to use in holding financial institutions responsible for misconduct.”

“HSBC had a responsibility, as a servicer, to have controls in place which ensured the fees and charges submitted to Fannie Mae were appropriate and reasonable,” said Michael P. Stephens, acting inspector general for the Federal Housing Finance Agency. “Their lack of controls showed gross neglect and an abject failure to serve their customers, FHA and Fannie Mae, and therefore the taxpayers. We are proud to have worked with our partners on this case.”

As part of the settlement, HSBC “admitted, acknowledged, and accepted responsibility” for its failure to adequately review the fees, according to the Justice Department.


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