One Of World's Largest Banks Warns Of Punishment For Improper Foreclosure Practices In U.S.

UPDATE 7:00 PM:

U.S. Bancorp, the nation's 10th-biggest lender by assets, also warned investors of impending penalties, its annual report shows.

The bank "expects monetary penalties" to be assessed, it said. U.S. Bancorp is the nation's sixth-largest handler of home mortgages, servicing some $216 billion in home loans, according to Inside Mortgage Finance.

Federal bank regulators, which had targeted the lender for its foreclosure practices, described their findings to the firm last month, according to the bank's securities filings.

Based on the review, U.S. Bancorp expects regulators will "require" the lender to improve its internal oversight of foreclosure practices and the way it handles delinquent mortgages, the bank said. It added that it does not expect such changes to "materially" affect its bottom line, securities filings show.

UPDATE 6:00 PM:

JPMorgan Chase, the nation's second-biggest bank by assets, today followed HSBC and other banks in warning about the risk of government actions and penalties. The lender told investors in its latest annual report that it could face "material fines" and "significant legal costs" from regulators' probes into the mortgage industry. The bank said it could also be required to change how it treats borrowers who fall behind on their mortgages.

After internal investigations found problems with the bank's procedures, JPMorgan temporarily halted foreclosure proceedings last September. In October, it froze home repossessions. As of last month, JPMorgan had resumed initiating new foreclosure cases in "nearly all states" where it had froze activity, according to the firm's securities filings. Foreclosure proceedings in some states, though, remain halted, documents show. It expects to resume repossessing homes in all states in the "near future," it said.

JPMorgan added that it may face penalties and other regulatory actions. The lender warned investors it is unable to estimate the total damage to the firm that could result from the various civil and criminal investigations into its foreclosure practices.

JPMorgan Chase handles $1.3 trillion in home loans, third-most in the U.S. and equal to 12 percent of all outstanding residential mortgages, according to Inside Mortgage Finance.

ORIGINAL POST:
HSBC North America Holdings, the nation's ninth-largest bank by assets, warned investors Monday of impending fines after receiving notice from federal bank regulators admonishing the lender for improper foreclosure practices.

The bank is the latest in a string of large financial companies that have used recent securities filings to prep investors for fines and a significant increase in costs associated with processing mortgages and repossessing homes, after being cited by regulators for deficient and sometimes illegal operations. On Friday, Ally Financial, Wells Fargo & Co., and SunTrust Banks -- three of the nation's 10 largest handlers of home mortgages -- said in regulatory documents that they expect to be sanctioned by the U.S. government for their foreclosure practices.

The penalties follow months-long criminal and civil probes by federal and state regulators into lenders' mortgage practices. Officials said they found significant shortcomings and violations of various state laws. A "small number" of foreclosures should not have occurred, John Walsh, the interim head of the Office of the Comptroller of the Currency, the federal regulator of national banks, told a Senate committee earlier this month after his agency surveyed less than 3,000 out of millions of loan files.

The lender's two mortgage subsidiaries, HSBC Finance Corp. and HSBC Bank USA, both received letters from regulators. The Federal Reserve noted "deficiencies" in how the consumer finance arm and the holding company processed foreclosure documents, how it monitored for such issues and the lack of resources they devoted to evicting borrowers from their homes, according to the firm's annual reports filed with the Securities and Exchange Commission. Its subsidiary bank received a similar letter from the OCC.

Combined, HSBC handles about $110 billion in home loans, making it the 12th-largest mortgage servicer in the country, according to Inside Mortgage Finance, a trade publication and data provider. The firm has suspended home repossessions since identifying improper foreclosure practices.

In regulatory filings filed with the SEC in November, the bank said it had not suspended foreclosures due to the so-called robo-signing controversy, which forced many of its competitors to halt home repossessions after evidence revealed improper foreclosure practices. But in its most recent filings, HSBC indicated that it had suspended home repossessions. This occurred sometime between Nov. 5 and today.

HSBC expects to be subject to a regulatory order banning certain mortgage and foreclosure practices, according to its SEC filings, joining other large firms. The lender is currently in discussions with the Fed and the OCC over the terms of the cease and desist orders, which will require HSBC to fix various deficiencies identified by bank regulators, it said. The orders will be finalized "shortly after" the lender filed its annual reports with the SEC, it said.

The orders may subject the firm to more lawsuits, it added. They also may hurt the firm's reputation and drive up costs associated with implementing proper foreclosure practices. Mortgage companies have long neglected how they handle home loans, regulators have said, skimping on basic practices in order to save money.

Perhaps most significantly, the regulators' various orders will not preclude further action against HSBC, including fines and other monetary penalties, the firm said. The financial services giant, one of the largest banks in the world by assets, could not predict how all of this would impact its bottom line, it said.

On Friday, SunTrust outlined a settlement agreement it expects the bank, as well as other large firms, to adhere to based on demands from regulators. The company will likely have to acknowledge they improperly handled documents when trying to foreclose on homeowners, failed to devote sufficient resources when handling mortgages and failed to develop systems to prevent such problems, SunTrust told investors in its annual report.

HSBC is among the lenders being targeted for improper and at times illegal foreclosure practices that have led to delays in home repossessions and a decrease in foreclosures, roiling the housing market and depressing home prices. About a dozen federal regulators, along with attorneys general in all 50 states, are conducting the investigations. The Huffington Post reported Thursday that federal regulators could demand as much as $30 billion in penalties from the 14 largest mortgage firms. State regulators, who at present are only examining the five largest servicers, are looking to exact even heftier fines from the targeted companies.

*************************

Shahien Nasiripour is a business reporter for The Huffington Post. You can send him an e-mail; bookmark his page; subscribe to his RSS feed; follow him on Twitter; friend him on Facebook; become a fan; and/or get e-mail alerts when he reports the latest news. He can be reached at 646-274-2455.

Comments

[godschilddd]

06:14 PM on 03/05/2011

Im not surprised. Ive been jumping through hoops with HSBC for over a year. Im so frustrated with this lender. I keep sending paper work that they lie and say they never recieve.Or they say I forgot to include some document which I know I included. They wont allow me to make a mortgage payment because they say depending on which day you call that my account has been forwarded to there attorneys and that Im in foreclosure. Everyday I go to the mailbox in fear of a forclosure date. My reinstatement fee is well over 20k and growing. They aproved me for a forbearance but ask for a ridiculous lump sum payment at the end of it that they never told me about in the beginning. I was told they would cut my mortgage in half for 6 months. They said they would put the other half on the back of the loan. This is not what happened. They demanded a ridiculous lump sum or face foreclosure. This was a year ago. Since then ive been sending documents proving that I can afford the mortgage. What can I do? Who can I write or call to help me with this mess? I dont want to lose my home that I can easily afford. However I dont have a lump sum of 20k or more. It would never have gotten to this amount if they would have done things right. SOMEONE PLEASE HELP!!!!! my e-mail is [e-mail]

[Yorksgal]

09:08 PM on 03/04/2011

Blah, blah, blah, blah, blah - nothing is going to happen remember they are too big to fail and employ all those people who are so talented and desperately needed.

This is just another play in their let's frighten everyone and take over another piece of the pie.

[charlesamerica]

08:04 AM on 03/02/2011

This entire thing is a joke with these regulators, while I have been filing complaints for over a year with the OCC, and the staff has even less knowledge as to what was supposed to taken place and what should now be taken place.

The OCC is a prejudice organization that first see this foreclosure problem, as if only the people had made their mortgage payments everything would have been fine without observing first the FACTS that corporations they should have been regulating, should not have conducted themselves in illegally and unethical practices!

It is equally ridicules that Sheila Bair is calling for banks to be downsized if she had only required the banks under her regulating authority to provide government insured mortgages to minority in accordance with the Fair Housing Act, she would not have closed 300 banks in 2009-2010 and 23 banks so far in 2011 with another 880 banks on the watch list, about a third of the banks she regulate are on a watch and this, Chairperson still has her job?

[bittervictim]

11:34 PM on 03/01/2011

Jamie,
I hope the regulators treat you the same way your bank treated me. With ridicule and condescension before squashing you like an incidental gnat. Regulators - why have you been hiding? What? What are you afraid of?

[RightToCancel]

03:35 PM on 03/01/2011

Time to hold banks accountable for the fraudulent actions? Need to start small, begin to audit your own situation with the credit instrument you created... I have personally seen many people who are standing up for right's, fighting for their homes using a proven system and administrative procedures to gather all evidence needed to prove their cases, Judges will listen if you know how to use the system to work for you instead of against you, most judges who listen to pro se litigants that have gather the proper info by using third party witness such as notary acceptance and state their claim will make just rulings, you must know your arguments, and win the case before you even get to court using proven methods, check our site to learn how to foreclose on your bank! www.righttocancel.com/info

We can not let our lack of knowledge of the UCC and financial system be used against us.

UCC"Promissory note" means an instrument that evidences a promise to pay a monetary obligation, does not evidence an order to pay, and does not contain an acknowledgment by a bank that the bank has received for deposit a sum of money or funds.

The Administrative Procedures Act and evidences of the banks' default and fraud. When you complete the administrative processes using our forms you will be awarded with a judgment and claim/lien against the bank which is recorded on a UCC-1 Financing Statement. www.righttocancel.com/info

[blood1]

03:08 PM on 03/01/2011

Someone please tell me the annual bonus amounts that the CEO and CFO's received in 2009 and 2010 when they were illegally forcing people out of their homes?

How much did the stockholder's earn/ share while these banks were illegally foreclosing?

And no one thought this sounded just "a little fishy". Nah, they cashed the checks and laughed. Fines are insufficient! Why pray tell is no one going to jail?

[GeneralJustice]

12:31 PM on 03/01/2011

According to the news, HSBC is suspending all foreclosures.

Bank of America and Chase should do the same. Actually, the OCC should require them to do so.

The loan servicers need to address loan servicing abuses and should do so immediately.

[wheresmyjob]

12:08 PM on 03/01/2011

We had been homeowners for over 25 years. We lost our job. The bank was reluctant to help us find a solution. When we contacted the loan servicer we were told by the loan servicer that they would send out a packet for us to complete and return. We did this 5 times. The bank did not responded to our paperwork. Everytime we called the servicer to find out the status of our request for modification they would tell us they were going to send out a packet for us to complete and return. This seemed to be the pat answer to every inquiry. After several rides on this merry go round we jumped off the crazy ride.
Last October JP Morgan-Chase quit claimed our mortgage to another bank. That bank sold our house for almost a million less than what we paid for it 5 years earlier.

So now the Feds are going to finally call the banks out on this farce. Should be interesting to see how all this will play out. Maybe it will be sweet enough to mask this bitterness inside me.

[IndyFem]

01:08 PM on 03/01/2011

wheresmyjob.....If you weren't bitter about this....you would have to in a coma! If it weren't for the banks....you probably would not have lost your job in the first place.

[Cherie Lyon]

12:04 PM on 03/01/2011

Out of curiosity, does anyone know of any good credit unions? I want to keep my money away from the banks...

[Angie Tyne 1]

12:48 PM on 03/01/2011

School's First FCU is amazing. The only fee you pay is if you use a non-cu atm. I pulled money out of a cu atm across the country. No fee. No fee checking w/$50 minimum. Tons of other no fee services.
http://schoolsfirstfcu.org/

[Cherie Lyon]

01:50 PM on 03/01/2011

Thanks!

[Nobody78]

11:42 AM on 03/01/2011

What's their punishment? More tax breaks and bailouts.

[mmt050]

11:39 AM on 03/01/2011

Here's my plan to stimulate the economy www.TopFreeBusiness.com

[grf67]

11:37 AM on 03/01/2011

Excellent - bank presidents doing hard time in federal prisons.

[yakmeat]

11:35 AM on 03/01/2011

Dear investors,

We broke the law and destroyed the economy. Of course, we should be put out of business, but we own Congress and the regulatory authorities, so don't worry, you'll still get your share of the loot.

You might not get quite a much of the spoils as you had hoped for, but stick with us and we'll get you some more with our next scheme. Remember, we're "savvy businessmen".

[fortressfountain]

11:28 AM on 03/01/2011

These same banks send me credit card notices daily. No thanks, I do not feel like being ripped off. My statue of limitations is almost over and I will not have to pay zip to the thieves.
They do not like it when you use their corrupt system against them.

[DebtNavigation]

11:26 AM on 03/01/2011

U.S. Bank and all the other TBTF banks needs to be spanked not by the government, but by the American people, who need to defend foreclosure actions, hang on to their homes, and even use civil disobedience and flash protests and sit-ins to stall efforts to dispossess them. Mexicans did it.

In Mexico in the mid-'90s Wall Street engineered a currency coup that tripled the debt owed by small businesses and family farms and also allowed for them to be massively ratejacked on top of it. Mexicans consequently formed the "el Barzon" movement and pushed back Wall Street and deposed their ruling party of 60+ years. In this country YouTube phenom Ann Minch has already declared the debtors' revolt and begun going after them http://www.revoltstartsnow.com

If you've been pushed under, you can read every other page of my book for free: http://www.scribd.com/doc/25443175/Debt-Hope-Down-and-Dirty-Survival-Strategies-Evaluation-Version-Complete Also available on Amazon.