Stopping Foreclosure: Another Big Bank (HSBC) Suspends Foreclosures Because of Investigation into Robosigning
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Back in October, many large banks in the U.S. halted foreclosures because of investigations by the feds into improper procedures known as robosigning. Now, another large bank – a European one that holds a lot of U.S. mortgages – has stopped foreclosure proceedings because of the same thing.
The bank is HSBC, which is Europe’s largest bank (Learn more in HSBC Halts U.S. Mortgage Foreclosures After Joint Examination by Fed, OCC).
Why HSBC Bank Is Halting U.S. Foreclosures
According to the article, HSBC Suspends Foreclosure Filings in U.S., the reason the giant London-based bank is stopping foreclosures for now is:
. . . it . . . received a supervisory letter from the Officer of the Comptroller of the Currency that cited problems in its processing, preparation, and signing of affidavits and other documents supporting foreclosures. The bank received a similar letter from the Federal Reserve.
Just like with U.S. banks though, the same outcome is expected, ie, once the feds have completed their investigations, foreclosure proceedings against homeowners are expected to continue.
How HSBC Operates When It Comes to Home Loan Modifications Compared to Some Large U.S. Banks
HSBC is known as one of the toughest banks around when it comes to renegotiating your home loan, ie, getting a home loan modification. Unlike some giant U.S. banks (eg, Bank of America) that have bent over backwards to work with homeowners who want to stop foreclosure, HSBC has a reputation for not doing so.
Bank of America Gives Permanent Home Loan Modifications; HSBC Doesn’t
For example, one Bank of America homeowner I know of got her mortgage reduced by almost 50%, going from paying almost $1,600 a month to paying just over $800 — and this includes property taxes and insurance).
Furthermore, this is a permanent home loan modification, not some temporary mod that can go back up over time.
Bank of America Gives Principal Reductions; HSBC Doesn’t
AND, this homeowner also received a principal reduction. What this means is that Bank of America (her mortgage holder), took $16,000 off what she has to pay them back. This is very uncommon of – even in this foreclosure-ridden market.
Compare this with HSBC . . . they don’t do principal reductions, they don’t give permanent home loan modifications and if you fall behind on your mortgage by more than 3-4 months, you’re most likely going to be foreclosed on by them.
While this is just a sampling of HSBC mortgage practices, it seems to be a good indication of how HSBC operates when it comes to home loan modifications.
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How to Use This Time to Your Advantage If You Have a Home Loan with HSBC
If you have a home loan with HSBC, try to use this time to save some money so that you can bring your mortgage current if you want to stop foreclosure. The one thing that most of the forums and internet chatter in general seem to agree on when it comes to HSBC is that they want you to bring payments current before they’ll give you a modification – even a temporary one.
Insight into How to Bring Your Home Loan Current with HSBC in Order to Avoid Foreclosure and Qualify for a Home Loan Modification
Of course, this is the sticking point for most homeowners – when they fall behind, they don’t have the funds necessary to bring their mortgage totally current. If this sounds like you, ask them if you can take the overdue payments onto the back end of your home loan, and/or bring it current over time by paying a little extra each month for a time.
Also, continue to press them on a permanent home loan modification (even though this seems to be an exercise in futility).
It’s going to be a long, drawn-out process, so just buckle down and give them everything they ask for (eg, bank statements, proof of income (pay stubs), tax returns, etc.), if you’re seeking a home loan modification.
But, be sure the home loan modification you’re seeking with HSBC (or any other bank) is something you can afford going forward because if not, you’re going to find yourself facing foreclosure again – and possibly with no way to get another modification – if you miss even one payment.
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