As a major relief amid the ongoing legal hassles, HSBC Holdings plc HSBC won the dismissal of a foreclosure-related lawsuit filed by the New York Attorney General (“AG”) Eric Schneiderman in 2013. New York State Supreme Court justice John Michalski discharged the petition on the ground that delay in filing foreclosure documents cannot be counted as an illegal act.
The NY AG had alleged that HSBC had violated a state law that requires lenders to file documents, related to negotiation of loan modifications, within 60 days. The case accused HSBC of purposely ignoring the law and not giving borrowers a chance to re-negotiate loan terms. Hence, nearly 25,000 homeowners were unable to modify mortgage terms, leading to foreclosures.
The NY AG was seeking compensation for distressed homeowners, a waiver of charges and fees that were improperly imposed and other damages. Further, the case demanded an assurance that HSBC will file documents in timely manner going forward.
Nevertheless, a spokesperson for the NY AG stated that no decision, regarding whether any further appeal would be made or not, has been taken.
Notably, this is second time in the current year that the NY AG’s efforts to reprimand banks for their alleged failure to follow proper foreclosure procedure have hit a road block. In February, a federal judge in Washington dismissed a plea by the AG to sue Wells Fargo & Company WFC for non-compliance with the terms of the $25 billion national mortgage servicing settlement.
On the other hand, for HSBC, this dismissal comes as a major breather. The company has been facing a large number of litigations and probes for its past business conduct, which has been adversely impacting its financials. Hence, this dismissal is expected to lower its legal cost burden to some extent.
Currently, HSBC carries a Zacks Rank #5 (Strong Sell). Better-ranked foreign banks include Mitsubishi UFJ Financial Group, Inc. MTU and Banco Macro S.A. BMA, both holding a Zacks Rank #2 (Buy).
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