In the years following the crash of the housing market, many financial institutions have been investigated and sanctioned due to their business practices and the treatment of their customers. Many of those lenders entered into settlement agreements with the government to rectify abuses that occurred in the origination and services of mortgage loans, along with abuses in home foreclosure cases. HSBC Bank USA recently entered into a $470 million settlement, part of which will go to homeowners here in Florida.
Affected homeowners in Florida could be given modifications to their loans, direct payment options or other forms of relief. Approximately 6,400 people could be eligible for direct payments. The amounts of those payments will be determined once the time for submitting claims elapses, since it will depend on how many people file claims.
Forty-nine states, including Florida, three federal agencies and the bank took part in the settlement. Under the terms of the settlement, around $59.3 million will be put into an escrow account. This account will provide restitution to homeowners whose homes were foreclosed from 2008 through 2012. Another $370 million is earmarked to provide relief to consumers who are at risk of defaulting on their mortgage loans through principal and/or interest rate reductions, forbearance agreements and other relief. The majority of the remaining $40.7 million will go to the federal agencies involved in the settlement.
This is good news for many HSBC customers in Florida. However, for some, it could still be too little too late. Those homeowners might consider filing for bankruptcy in order to avoid home foreclosure. In addition to potentially being able to keep their homes, filers could receive a discharge of the other debts that they have.
Source: Tampa Bay, FL The Biz Journals, “Florida part of $470M mortgage settlement with HSBC“, Margie Manning, Feb. 5, 2016