UPDATE 1-New York court dismisses foreclosure lawsuit against HSBC

(Recasts lead, adds quote)

By Jonathan Stempel and Karen Freifeld

March 31 (Reuters) - A New York judge this week dismissed alawsuit filed by the state's attorney general that accused HSBCHoldings Plc of ignoring a law designed to protecthomeowners from foreclosure.

The lawsuit, filed in 2013 by New York Attorney General EricSchneiderman, alleged HSBC violated a state law requiringlenders to file paperwork, known as a request for judicialintervention, which entitles homeowners to settlementconferences within 60 days to negotiate loan modifications. (http://reut.rs/1xVcVHL)

Justice John Michalski of New York State Supreme Court inBuffalo dismissed the case on Monday, ruling that HSBC's delayor failure in filing the administrative paperwork wasprocedural, not substantive, and did not qualify as an "illegalact," according to a copy of the decision seen 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.

Matt Mittenthal, a spokesman for the New York attorneygeneral, said the office had not decided whether to appeal."Despite this ruling, Attorney General Schneiderman willcontinue to fight for families struggling to recover from thehousing crisis," he said. (Writing by Shubhankar Chakravorty and Ankush Sharma inBengaluru; Editing by Ken Wills and Anupama Dwivedi)