HSBC agrees to $765m mortgage-bond settlement with DOJ

by Francis Monfort07 Aug 2018

HSBC has disclosed that it has reached a $765 million settlement-in-principle with the Department of Justice to resolve civil claims relating to its investigation of HSBC’s legacy residential mortgage-backed securities (RMBS) origination and securitization activities from 2005 to 2007.

During the first quarter, the bank had recorded $897 million in settlements and provisions in connection with legal and regulatory matters, including active discussions with the DOJ. The settlement-in-principle was reached in July.

Separately, the bank also settled a civil investigation by the Massachusetts Attorney General into its legacy RMBS origination and securitization activities from 2005 to 2007.

Attorney General Maura Healey announced that HSBC Securities will pay $26.8 million to settle allegations that it purchased and securitized unfair residential mortgage loans in violation of state law.

“HSBC’s securitization practices contributed to a financial crisis that deeply harmed Massachusetts communities and caused families to lose their homes,” Healey said. “We will continue to help consumers who were sold toxic mortgages by these banking institutions and are pleased that this settlement will provide significant relief for families that have suffered harm from unsustainable subprime loans.”

The DOJ and the Massachusetts Attorney General started investigations into HSBC’s involvement in certain RMBS transactions as an issuer, sponsor, underwriter, depositor, trustee, custodian, or servicer. Since 2010, various HSBC entities have received subpoenas and requests for information from the agencies seeking the production of documents and information.


Related stories:
HSBC sets aside $897mn over potential mortgage-bond settlement, mediation
GE reserves $1.5bn as DOJ continues to investigate WMC Mortgage, GE Capital




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