HSBC hit by £325m mortgage abuse fine

HSBC has been fined £325m in the US for its ‘abusive’ treatment of struggling mortgage customers during the financial crisis.

The British bank routinely repossessed the homes of thousands of customers who fell behind on their repayments without reviewing their individual circumstances or allowing them to appeal.

This ruthless practice is known as ‘robo-signing’.

Staff at the firm also lost crucial paperwork, changed customers’ loans without telling them and submitted ‘improper documentation’.

New York Attorney General Eric Schneiderman said: ‘There has to be one set of rules for everyone, no matter how rich or how powerful, and that includes lenders who engage in abusive business practices.’

The mortgage settlement resolves claims brought against HSBC by the US Department of Justice, the Consumer Financial Protection Bureau, the Department of Housing and Urban Development, and 49 states, plus the District of Columbia.

Nearly 136,000 HSBC customers in New York whose homes were repossessed from January 1, 2008, to December 31, 2012, could be eligible for compensation.

The Justice Department said £256m of HSBC’s settlement will be dished out to distressed customers, with some seeing their mortgages reduced.

The remaining £69m will be divided between the federal government and a compensation pot which will be used by US states to help borrowers whose homes were repossessed by HSBC.