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HSBC Bank USA is clogging New York courts with stalled foreclosure cases and leaving thousands of the state’s homeowners in legal limbo, state Attorney General Eric Schneiderman charges in a lawsuit.
Filed in an Erie County state court Tuesday, the lawsuit accuses HSBC and HSBC Mortgage Corp. of filing foreclosures and serving property owners with summonses, but then indefinitely stalling the cases by not filing requests for judicial intervention to put them on a judge’s docket within the 60 days required by law.
The action is first of several court complaints he plans to file against other, unnamed lenders who engage in the same stall, Schneiderman said.
An investigation conducted by his office turned up some 300 such cases in four counties, the attorney general said. The delay has kept some homeowners waiting for the foreclosure ax to fall for as long as two years with HSBC continuing to charge interest on their loans and assess fees and penalties.
Such delays increase already strapped homeowners’ chances of losing their homes and could squelch their chances of negotiating a loan modification, Schneiderman said.
A state Office of Court Administration report estimates failure to file timely requests for judicial intervention has put some 25,000 New York homeowners in legal limbo. The foreclosure backlog also has created a “shadow docket” burdening the state’s courts, the attorney general added.
Schneiderman’s court action seeks to have HSBC:
• Prepare an accounting of interest charges, penalties and fees beginning 60 days after the filing of proof of service on affected homeowners;
• Waive all accrued interest charges, fees and penalties that accrued, or will accrue, beginning 60 days after the filing of proof of service on the homeowner;
• Grant restitution for interest charges, fees and penalties paid by the homeowner that accrued beginning 60 days after the filing of proof of service on the homeowner; and
• Pay damages to affected homeowners.
“My office will continue to bring these types of cases until every homeowner in the shadow docket receives the relief they are legally entitled to,” Schneiderman said.
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