Lending Servicing

OCC terminates HSBC mortgage servicing restrictions

Fined $32.5 million for violating Independent Foreclosure Review

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The Office of the Comptroller of the Currency terminated its mortgage servicing-related order against HSBC Bank USA, lifting restrictions placed on the bank over its failure to comply with requirements of the Independent Foreclosure Review. This termination marks the last OCC-regulated mortgage service to have its order terminated.

The OCC originally issued the order in April 2011 and amended it in February 2013, with the most recent amendment in June 2015 forcing business restrictions on HSBC.

HSBC must also pay a $32.5 million civil money penalty for previous violations of the order, which it will pay to the U.S. Treasury.

The OCC stated HSBC failed to correct deficiencies identified in the 2011 consent order in a timely fashion. As a result, the OCC determined the bank violated the 2011 consent order from Oct. 1, 2014, through Sept. 30, 2016.

In addition, the OCC found that HSBC failed to file payment change notices that complied with bankruptcy rules, which resulted in approximately $3.5 million in remediation to borrowers.

“We’re pleased with the OCC’s assessment of the enhancements we’ve made to mortgage servicing over the last several years,” said Robert Sherman, a spokesperson for HSBC. “The steadfast commitment of our employees to this effort has made HSBC both more compliant and customer friendly.”

HSBC wasn’t alone though. The OCC slapped HSBC and five other banks with restrictions on each bank’s mortgage servicing operations due similar violations.

The OCC terminated the mortgage servicing-related consent orders against JPMorgan Chase and EverBank first, lifting the restrictions in January 2015.

U.S. Bank National Association and Santander Bank came not too long after, with the OCC lifting the restrictions the following February.

A couple months later, in May, the OCC announced it finally lifted its mortgage servicing restrictions on Wells Fargo since bank was in compliance.

Although Wells Fargo and HSBC took the longest to have their restrictions lifted, the two banks were dealt the hardest blow in the OCC’s ruling since they were the only two to have operations terminated.

The terminations included:

  • Acquiring of mortgage servicing rights until the consent order is terminated
  • New contracts to perform mortgage servicing prohibited until the consent order is terminated
  • New offshoring of mortgage servicing activity until the consent order is terminated

EverBank, JPMorgan Chase, Santander Bank NA, U.S. Bank National Association only needed prior approval from the OCC on mortgage servicing activity.

The six banks now no longer have any restrictions. 

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