New York court dismisses foreclosure lawsuit against HSBC

By Jonathan Stempel and Karen Freifeld

March 31 (Reuters) - A court in Buffalo, New York, dismisseda petition on Monday filed by New York state, alleging that HSBCHoldings Plc ignored a law designed to protecthomeowners from being thrown into foreclosure without getting achance to renegotiate their mortgages.

The lawsuit filed by Attorney General Eric Schneiderman in2013 accused HSBC of letting foreclosure cases languish byignoring a state law intended to give as many as 25,000homeowners a chance to negotiate loan modifications. (http://reut.rs/1xVcVHL)

New York State Supreme Court justice John Michalski saiddelays in HSBC's filing its paperwork related to theforeclosures did not qualify as an "illegal act" under the statelaw that Schneiderman said the bank violated, according to acopy of the decision reviewed by Reuters.

"The mere possibility" that HSBC might have violated the law"cannot serve as the basis" for the lawsuit, Michalski said.

Rob Sherman of the media relations team at HSBC toldReuters: "We of course agree with the court's decision todismiss the case, and remain committed to ensuring thatstruggling homeowners are treated fairly."

The decision could not immediately be located in courtrecords.

"The attorney general has not yet decided whether toappeal," Matt Mittenthal, a spokesman for the New York AttorneyGeneral, told Reuters. (Writing by Shubhankar Chakravorty in Bengaluru; Editing by KenWills)