Foreclosure Freeze | HSBC 10K Report on Fraudclosure "Deficiencies"
From the report...
may incur additional costs and expenses in ensuring that we satisfy
requirements relating to our mortgage foreclosure processes and the
industry-wide delay in processing foreclosures may have a significant
impact upon loss severity. State and federal officials are
investigating the procedures followed by mortgage servicing companies
and banks, including HSBC Finance Corporation and certain of our
affiliates, relating to foreclosures. We and our affiliates have
responded to all related inquiries and cooperated with all applicable
investigations, including a joint examination by staffs of the Federal
Reserve and the OCC as part of their broad horizontal review of
industry foreclosure practices. Following the examination, the Federal
Reserve issued a supervisory letter to HSBC Finance Corporation and
HSBC North America noting certain deficiencies in the processing,
preparation and signing of affidavits and other documents supporting
foreclosures and in governance of and resources devoted to our
foreclosure processes, including the evaluation and monitoring of third
party law firms retained to effect our foreclosures. Certain other
processes were deemed adequate. The OCC issued a similar supervisory
letter to HSBC Bank USA. We have suspended foreclosures until such time
as we have substantially addressed the noted deficiencies in our
processes. We are also reviewing foreclosures where judgment has not
yet been entered and will correct deficient documentation and re-file
affidavits where necessary.
We and our affiliates are engaged in
discussions with the Federal Reserve and the OCC regarding the terms
of consent cease and desist orders, which will prescribe actions to
address the deficiencies noted in the joint examination. We expect the
consent orders will be finalized shortly after the date this Form 10-K
is filed. While the impact of the Federal Reserve consent order on HSBC
Finance Corporation depends on the final terms, we believe it has the
potential to increase our operational, reputational and legal risk
profiles and expect implementation of its provisions will require
significant financial and managerial resources. In addition, the
consent orders will not preclude further actions against HSBC Finance
Corporation or our affiliates by bank regulatory or other agencies,
including the imposition of fines and civil money penalties. We are
unable at this time, however, to determine the likelihood of any
further action or the amount of penalties or fines, if any, that may be
imposed by the regulators or agencies.
We expect to incur
additional costs and expenses in connection with the correction or
affirmation of previously filed foreclosure paperwork and the resulting
delays in foreclosures, including costs associated with the
maintenance of properties while foreclosures are delayed, legal
expenses associated with re-filing documents or, as necessary,
re-filing foreclosure cases, and costs associated with fluctuations in
home prices while foreclosures are delayed. These costs could increase
depending on the length of the delay. In addition, we may incur
additional costs and expenses as a result of legislative, administrative
or regulatory investigations or actions relating to our foreclosure
processes or with respect to the mortgage servicing industry in general.
We may also see an increase in private litigation concerning our
practices. However, it is not possible at this time to predict the
ultimate outcome of these matters or the impact that they will have on
our financial results.
Due to the significant slow-down in
foreclosures, and in some instances, cessation of all foreclosure
processing by numerous loan servicers, including us, for some period of
time in 2011 there may be some reduction in the number of properties
being marketed following foreclosure. The impact of that decrease may
increase demand for properties currently on the market resulting in a
stabilization of home prices but could also result in a larger number
of vacant properties in communities creating downward pressure on
general property values. As a result, the short term impact of the
foreclosure processing delay is highly uncertain. However, the longer
term impact is even more uncertain as eventually servicers will again
begin to foreclose and market properties in large numbers which is
likely to create a significant over-supply of housing inventory. This
could lead to a significant increase in loss severity on REO
The entire 10K report can be read here...
Well, that’s a pretty dramatic reversal from its stance from just a few months ago, when they said publicly that they would not suspend home seizures because they
didn’t feel their procedures were compromised by so-called “robo-signers”
and felonous court affidavits.
HSBC CEO Irene Dorner, October 2010: "We have looked. We don't have robo-signers," HSBC has not suspended foreclosures and "we don't believe
we have a reason to do so," she said.
Now where are the damn handcuffs???
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