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(Adds comment from HSBC and details on the breakdown of the$470 million laid out by the U.S. Justice Department)
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,government officials announced 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 Justice Department said the deal will provide for $370million in various forms of consumer relief, such as reducingthe principal on some borrower's mortgages.
Another $100 million, meanwhile, will be divided up intoseveral pots, with $40.5 million going to the federalgovernment, $59.3 million going into an account that the stateswill use to pay borrowers who lost their homes in foreclosure,and an additional $200,000 to reimburse state attorneys generalfor investigative costs.
"We are pleased to have reached this settlement and believeit is a positive result that benefits American homeowners andthe US housing industry," said Kathy Madison, the chiefexecutive officer of HSBC Finance Corp.
She added the bank has worked to "stay focused on homepreservation" and make foreclosure "a last resort option."
The HSBC accord largely mirrors a 2012 national mortgagesettlement that federal and state officials struck with five ofthe country's largest banks, including Bank of America and JPMorgan Chase & 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.
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 aWashington, D.C. federal court.
"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. (Reporting by Sarah N. Lynch; Editing by Bernard Orr, Lisa VonAhn and Chris Reese)
