A $249 million settlement in principle has been reached with HSBC for its use of so-called foreclosure mills, two U.S. regulators announced Friday.
The Federal Reserve and Office of the Comptroller of the Currency said HSBC would be subject to "enforcement actions for deficient practices in mortgage loan servicing and foreclosure processing," MarketWatch.com reported.
The settlement includes $96 million in cash payments to borrowers, some of whom ended up in foreclosure. HSBC also agreed to provide another $153 million in other assistance to homeowners, such as modifications on their mortgages.
The settlement with HSBC follows similar settlements with a dozen other large financial institutions, including Goldman Sachs and Morgan Stanley.
Foreclosure abuses were discovered as banks tried to process the mountain of foreclosures that arose during the recent recession. Many banks hired "foreclosure mills" that went through the foreclosure process so quickly, they were accused of denying homeowners of due process entitled by law.
Among other things, the firms were accused of signing documents the signatories hadn't read and using fake signatures.
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