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By Sarah N. Lynch
WASHINGTON, Feb 5 (Reuters) - HSBC Holdings Plc will pay $470 million to settle parallel U.S. federal and statecivil charges alleging the bank's mortgage servicing arm engagedin abusive foreclosure and loan origination practices, the NewYork Attorney General's office said on Friday.
The mortgage settlement resolves claims brought against theLondon-based bank by the Justice Department, the ConsumerFinancial Protection Bureau, the Department of Housing and UrbanDevelopment, and 49 states plus the District of Columbia.
The New York Attorney General's office said the HSBC accordlargely mirrored a 2012 national mortgage settlement thatfederal and state officials struck with five of the country'slargest banks, including Bank of America and JPMorganChase & Co.
The national mortgage settlement came in the aftermath ofthe 2007-2009 housing crisis, when many people lost their homesto foreclosure.
The mortgage servicing investigation started after evidenceemerged late in 2010 that banks had robo-signed thousands offoreclosure documents without properly reviewing paperwork.
The HSBC agreement requires the company to provide varioustypes of relief to mortgage holders, such as principalreductions and refinancing for underwater mortgages.
Some borrowers who may have been harmed by the bank'smortgage servicing practices may also be eligible to receivepayments through a national $59.3 million fund.
HSBC also needs to undertake certain corrective actions.
For instance, it must not foreclose on homeowners beingconsidered for a loan modification and must give those people achance to appeal denials.
HSBC must also install an independent monitor to reviewcompliance with the settlement, which will be entered into afederal court in Washington, D.C.
"There has to be one set of rules for everyone, no matterhow rich or how powerful, and that includes lenders who engagein abusive business practices," New York Attorney General EricSchneiderman said in a statement.
His office said New York had about 136,000 borrowers who maybe eligible to reap the financial benefits from Friday'ssettlement. HSBC serviced the loans of these borrowers, wholater lost their homes between 2008 and 2012. (Reporting by Sarah N. Lynch; Editing by Bernard Orr and LisaVon Ahn)
