HSBC has agreed to settle claims that it didn’t do enough to monitor fees charged by outside attorneys and service providers involved in foreclosures on agency mortgages.
An announcement from the U.S. Department of Justice in Manhattan, N.Y., said that London-based HSBC has admitted to misconduct by some of its U.S. subsidiaries.
The subsidiaries — HSBC Bank USA, N.A.; HSBC Finance Corp.; HSBC Mortgage Corp.; and HSBC Mortgage Services Inc. — were deficient in their oversight of the reasonableness of foreclosure-related charges submitted for reimbursement.
In addition, HSBC failed to create or maintain an adequate quality control program for its Federal Housing Administration-insured loans.
HSBC made false certifications to the Department of Housing and Urban Development prior to 2011 and to the Federal National Mortgage Association from May 2009 until December 2010 — violating the False Claims Act in the process.
U.S. Attorney Preet Bharara said in the news release Tuesday that HSBC has agreed to settle the civil fraud claims for $10 million.
In the settlement, which was approved Monday by a judge in U.S. District Court for the Southern District of New York, HSBC accepted responsibility for failing to create or maintain systems to review fees and charges submitted by outside counsel and other third-party providers such as title companies and process servers.
HSBC has agreed to comply with all servicers rules on FHA, Fannie Mae and Freddie Mac loans.
“This includes compliance with all rules, requirements, or guidelines regarding implementation and maintenance of quality control programs, oversight of outside counsel and other third-party vendors, and submissions of fees and expenses for reimbursement by FHA, Fannie Mae, and/or Freddie Mac,” the announcement said.
The government intervened in a private whistleblower lawsuit previously filed under the False Claims Act. Whistleblowers are paid a portion of such settlements. The whistleblower suit remains under seal as the government continues its investigation.
