The state attorney general sued HSBC Bank USA and HSBC Mortgage Corp. (USA) June 5 for allegedly flouting state law related to foreclosures, notably the clause regarding a timely, legally mandated meeting between lender and troubled-mortgage holder.
HSBC maintains 18 full-service branches in Westchester County. Spokesman Neal McGarity said, “HSBC is committed to comply with all applicable laws relating to foreclosures and we look forward to responding to the attorney general”™s allegations.”
State Attorney General Eric T. Schneiderman claims HSBC is slow to arrange sit-downs with troubled-mortgage holders, which it is required to do within 60 days, a so-called settlement conference.
“Across New York, thousands of foreclosure cases are languishing for months, even years, because financial institutions delay filing the paperwork that triggers the settlement conference,” the attorney general”™s office alleged in a prepared statement.
“The subsequent backlog of cases is often referred to as the ”˜shadow docket,”™ and has become a major burden on homeowners and the judicial system. According to one report, the Office of Court Administration estimates that 25,000 families are trapped in the shadow docket.”
“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,” Schneiderman said. “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. I am committed to doing everything I can to stand up for New Yorkers who are trapped in the ‘shadow docket’ and denied their right to fight for their homes.”
The lawsuit demands HSBC act more expeditiously to bring about the conference between the bank and the mortgage holder. Financial penalties for delaying a conference are an option.
Schneiderman said cases that by law should be discussed in two months languish for years while interest and missed payments accrue.
