By Aruna Viswanatha
WASHINGTON, Jan 18 (Reuters) - The U.S. arm of HSBC Holdings
Plc agreed to pay $249 million to end a case-by-case review of
past home foreclosures in the United States, bringing the total
payout by banks to resolve related issues to $9.3 billion.
HSBC agreed to pay $96 million to eligible borrowers who
lost their homes to foreclosure in 2009 and 2010, and provide
$153 million in other assistance, including loan modifications
and forgiveness.
London-based HSBC said in a statement it was pleased to have
reached the agreement and expects to record a pre-tax charge of
$96 million in the fourth quarter of 2012 for the cash portion
of the settlement. The bank said it expected to cover the loan
assistance through existing reserves.
The settlement, with the Office of the Comptroller of the
Currency and the Federal Reserve Board, is the 13th the agencies
have reached this month.
They stem from reviews of individual loan files the
regulators ordered in 2011 and 2012, after widespread mistakes
were discovered in the way mortgage servicers had processed home
seizures.
The reviews, initially expected to determine which borrowers
were harmed and to compensate them based on their individual
experiences, proved slow and expensive.
Ten banks, including Bank of America, Wells Fargo,
Citigroup, and JPMorgan Chase, agreed to pay a total of $8.5
billion - some in cash, and the rest in loan assistance - to end
the reviews last week.
On Wednesday, Goldman Sachs and Morgan Stanley agreed to a
similar $557 million deal.
Around 112,000 borrowers whose homes were in foreclosure
with HSBC Bank and other HSBC subsidiaries will receive some
cash, regulators said.
Regulators said last week the payouts will be based on
whether a borrower falls into one of 11 categories. The
categories include whether the person was eligible for
protections under the Servicemembers Civil Relief Act, whether
the borrower was not in default, or whether he or she was denied
a loan modification.
The Fed and OCC are expected to reach similar agreements
with other servicers that had been asked to conduct the reviews,
including Ally Financial Inc, EverBank Financial Corp and
OneWest Bank FSB.
The settlement comes a little over a month after HSBC agreed
to pay a record $1.9 billion to resolve criminal charges that it
let itself by used to drug cartels and others to launder illicit
funds.
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