Citing failure to comply with New York foreclosure law, attorney general Eric Schneiderman has filed a lawsuit that accuses HSBC Bank USA and HSBC Mortgage Corp. for intentionally trapping homeowners into a foreclosure processing maze.
Schneiderman filed the lawsuit barely a week after the New York Assembly passed
Quoting Office of Court Administration estimates that 25,000 families are trapped in the “shadow docket,” state officials claim many of these foreclosure cases across New York “are languishing for months, even years, because financial institutions delay filing the paperwork that triggers the settlement conference.”
Mortgage lenders and servicers who sue to foreclose on a residential property in New York State are required to file a “Request for Judicial Intervention” that mandates that the homeowner and the lender attend a court-supervised settlement conference within 60 days to negotiate alternatives to foreclosure, including loan modifications.
HSBC is one of the banks that “are brazenly ignoring state law,” leaving homeowners in a legal limbo because they cannot get the legally required settlement conference that could help them keep their homes but instead keep accruing additional interest, fees and penalties, Schneiderman said.
The lawsuit alleges HSBC “repeatedly failed to timely file the RJI in
Allegations are based on findings from an investigation conducted by the AG’s office show HSBC failed to file the RJI with roughly 300 foreclosure filings from Erie, Monroe, Suffolk and Bronx counties.
For example, in the case of Rebecca Karm of Erie County, data provided by the Western New York Law Center show HSBC filed the proof of service on Nov. 12, 2010, but filed the RJI 547 days later on June 8, 2012 while fees accrued amounted to approximately $23,000.
Schneiderman filed the lawsuit in New York Supreme Court seeking HSBC “to file the RJI immediately in all cases in which it has filed a proof of service, and to file an RJI simultaneously with proof of service in all future cases.”
More specifically it requires the bank to prepare an accounting of all late fees, inspection fees, attorney's fees, broker reports and other charges accrued beginning 60 days after the filing of proof of service on the homeowner, waive all accrued interest charges, fees and penalties, grant restitution for all penalties paid by the homeowner during that timeframe and grant damage compensations.
Despite investigation costs, Schneiderman said, his office plans to bring “similar actions against other mortgage lenders.”
