LEGAL NEWSLINE

BUFFALO, N.Y. (Legal Newsline) - New York Attorney General Eric Schneiderman filed a lawsuit Tuesday against HSBC Bank USA and HSBC Mortgage Corporation (USA) over alleged failures to follow state law related to foreclosure actions.

HSBC's alleged failure to follow foreclosure state law, Schneiderman alleges, led to homeowners being put at greater risk of losing their homes.

Residential mortgage lenders, services and their agents who sue to foreclose on a homeowner are required by state law to file a "Request for Judicial Intervention," which can be obtained when filing proof of service with the country clerk. Under the process, lenders must then attend a settlement conference within 60 days to provide borrowers an opportunity to negotiate alternatives to foreclosure, including loan modifications to make mortgage payments more affordable.

Thousands of foreclosure cases in New York, however, have languished for years because of delays by financial institutions in filing paperwork to trigger the settlement conference. As many as 25,000 families are estimated by the Office of Court Administration to be trapped in the resulting backlog of cases.

"Companies like HSBC are brazenly ignoring state law, leaving homeowners across New York stuck in a legal limbo where they can't even get the legally required settlement conference that could help them keep their homes," Schneiderman said. "For homeowners facing foreclosure, time is their greatest enemy. Every day spent waiting for a settlement conference is a day that the lender piles on additional interest, fees and penalties and the homeowner falls further behind. I am committed to doing everything I can to stand up for New Yorkers who are trapped in the 'shadow docket' and denied their right to fight for their homes."