HSBC revealed in its Annual report that it was one of seven major banks under review by the Office of the Comptroller of the Currency (OCC) for mishandling of homeowner evictions.
“Following the examination, our examiners issued supervisory letters noting certain deficiencies in our processing, preparation and signing of affidavits and other documents supporting foreclosures, and in the governance of and resources devoted to our foreclosure processes, including the evaluation and monitoring of third party law firms retained to effect our foreclosures,” the company said in the report.
“Certain other processes were deemed adequate. Management is reviewing foreclosures where judgement has not yet been entered and will correct deficient documentation and re-file affidavits where necessary.”
Until then, foreclosures are on hold and the company is currently in talks with the Federal Reserve Board and the OCC regarding the terms of consent cease and desist orders.
The bank expects the consent orders to be finalized soon, but noted that the impact of the freeze has the potential to raise operational costs, while heightening “reputational” and legal risk.
HSBC may also be subject to fines and civil money penalties associated with the foreclosure missteps.
The company also revealed that mortgage lending in the U.S. fell by 17 percent to $51 billion last year, while mortgage lending in the UK increased seven percent to $104 billion.
Mortgage lending balances in HSBC Bank USA remained mainly unchanged at $16 billion, as the company continued to sell the majority of new loan originations on the secondary market.
HSBC shut both its HFC and Beneficial units back in 2009, resulting in thousands of layoffs.