HSBC Sued by NY A.G. Over Foreclosure Abuse

Today, the New York State Attorney General’s Office (AGO) announced that it has filed suit against HSBC Bank USA and HSBC Mortgage Corporation (USA) in NY State Supreme Court in Erie County. See THE PEOPLE OF THE STATE OF NY vs. HSBC BANK USA. The lawsuit states that HSBC is failing to follow state law related to foreclosure actions, thereby putting homeowners at greater risk of losing their homes.

Background

In New York, loans for real property are secured through mortgages rather than through deeds of trust. New York, unlike trust states, is a judicial foreclosure state. In states like New York, mortgage foreclosure actions must proceed through the judiciary system.

Clearly, there are laws that govern the judicial foreclosure process and lenders are no exception to the requirement that these laws be followed. The New York State Unified Court System (UCS) issued a rule in October 2010 requiring that all foreclosure law firms attest to the accuracy of the legal papers they filed in court, in response to the widely reported robo-signing scandal in the mortgage industry. Since the implementation of the rule, after a foreclosure action is filed, the foreclosure firm must file an affirmation (the “Due Diligence Affirmation”) simultaneously with its filing of a Request for Judicial Intervention (RJI). The process mandates that the lender then attend a settlement conference within 60 days. Surprisingly, many foreclosure law firms almost immediately stopped filing RJIs after issuance of the court rule. Foreclosure law firms who refuse to file the RJIs not only run afoul of state law, but also significantly injure homeowners who want to save their homes.

A RJI is a very important instrument in the litigation process that transforms an indexed case wherein documents are filed to a case that now has a justice assigned to the matter. Without an RJI, New York courts do not schedule court-supervised foreclosure settlement conferences. Cases, in which complaints are filed but no RJI is filed—which would otherwise move the case forward by assigning a justice to the matter—often linger indefinitely on the “shadow docket”. The shadow docket in New York consists of thousands of foreclosure cases that linger for several months, and sometimes years, causing distressed homeowners and the overtaxed judicial system to suffer. A recent report indicates that a “re-review of the November 2010 and March 2011 residential foreclosure filings in Brooklyn and Queens reveals that 43% of cases remain in the shadow docket.”

While cases are on the shadow docket, delinquent interest, inspection fees, attorney’s fees, and other costs in addition to the mortgage, continue to accrue. In general, the larger a loan balance, the more difficult it is to attain an appropriate and affordable modification.

Discussion

An investigation conducted by Attorney General Schneiderman showed that lenders HSBC Bank USA and HSBC Mortgage Corporation (USA) repeatedly failed to timely file the RJI in hundreds of foreclosure cases against New York homeowners, increasing the risk that those homeowners would lose their homes. A sampling of HSBC foreclosure filings from four counties — Erie, Monroe, Suffolk and Bronx — identified close to 300 instances where HSBC failed to file the RJI with the proof of service. In some of those cases, homeowners waited for over two years for HSBC to file the RJI.

“Companies like HSBC are brazenly ignoring state law, leaving homeowners across New York stuck in a legal limbo where they can’t even get the legally required settlement conference that could help them keep their homes,” said Attorney General Schneiderman. “For homeowners facing foreclosure, time is their greatest enemy. Every day spent waiting for a settlement conference is a day that the lender piles on additional interest, fees and penalties and the homeowner falls further behind. I am committed to doing everything I can to stand up for New Yorkers who are trapped in the ‘shadow docket’ and denied their right to fight for their homes.”

As a result of these findings, Attorney General Schneiderman filed suit seeking to compel HSBC to file the RJI immediately in all cases in which it has filed a proof of service, and to file an RJI simultaneously with proof of service in all future cases. In cases where HSBC has already failed to file the RJI with proof of service on the homeowner, the suit also seeks to compel HSBC to take the following steps to protect New York homeowners:

  • Prepare an accounting of interest charges, penalties and fees (e.g. late fees, inspection fees, attorney’s fees, broker reports) that accrued beginning 60 days after the filing of proof of service on the homeowner;

 

  • Toll and 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

 

  • Grant damages to homeowners injured by HSBC’s illegal practices.

Case Details

The presiding justice is Justice John L. Michalski. The index number for the instant action is 001660/2013. The attorney representing the AGO is James Morrissey. The RJI was filed on May 31, 2013. The AGO’s motion seeking the aforementioned relief was filed on June 3, 2013 and has a motion hearing date of July 24, 2013.

Conclusion

New York is undoubtedly well-represented. Attorney General Schneiderman is committed to prosecuting HSBC and any other lenders that deny New York homeowners their legal rights to negotiate alternatives to foreclosure. Schneiderman asserts that he will not hesitate to bring similar actions against other mortgage lenders who hold borrowers in the shadow docket in defiance of state law.

Resource By : https://sewellnylaw.com/hsbc-sued-by-ny-a-g-over-foreclosure-abuse

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Mr. Sewell continuously distinguishes himself as a top litigation attorney. He has twice been selected by New York Super Lawyers as a "Rising Star". Additionally, he is recognized as "Superb" and a "Top Litigation Attorney" by the lawyer-rating service Avvo. Moreover, he has been prominently featured as a preeminent legal authority on CNN. Attorney Sewell has several years of transactional experience as well as significant, state and federal litigation practice. Moreover, he is well-versed in prosecution matters before the United States Patent & Trademark Office and the United States Copyright Office. He has represented the spectrum of patent, trademark, and copyright owners, food and drug companies, business owners, non-institutional clients, and more. While at a top 100 law firm, Mr. Sewell's foci were in the areas of litigation and intellectual property. Prior to large firm practice, he honed his skills in Manhattan at a litigation boutique that specialized in intellectual property, food & drug law, and litigation. Mr. Sewell is also an alumnus of the distinguished Innocence Project at the Benjamin N. Cardozo School of Law. He drafted motions and briefs regarding reopening criminal cases and reversing convictions using DNA evidence. Ultimately, his efforts culminated in the exoneration of one of his clients. Dayrel also completed a legal internship at Bristol-Myers Squibb Company. While at Bristol-Myers, he gained patent litigation and prosecution experience through the Court of Appeals for the Federal Circuit litigation and training seminars, respectively. He also worked on several regulatory matters including corporate consultant agreements, conflicts of interest, clinical trials, and co-marketed pharmaceutical contracts. To continuously expand his expertise, Attorney Sewell has several years of experience providing counsel and litigation representation to real estate entities and individuals. Mr. Sewell recognizes the systemic real estate crisis and its affects on both investors and individuals, and is well-prepared to continue to assist clients with the crisis' persistent havoc that affects the millions of people involved. Prior to law school - with academic, medical background, and practicum requirements being met - Mr. Sewell received his M.P.H. from Columbia University and was a Director for medical research studies in New York City. Dayrel received his B.A. from The Johns Hopkins University, majoring in both Natural Sciences and Public Health. Mr. Sewell has also found time to do pro bono work. Of note, Dayrel is proficient in Spanish. Some examples of Attorney Sewell's work include: Litigation involving contracts, patents, real estate, securities, foreclosures, trademarks, copyrights, licenses, LLCs, and torts Negotiating/authoring business contracts and settlement agreements issuing patent and trademark opinions drafting and registering patents, trademarks, and copyrights counseling clients regarding food & drug product registration, compliance, and other regulatory matters advising startup companies and creating their business entity structure real estate transactions (i.e., conveyances, leases, title searches, deeds, assignments, recordings, etc.) Bar admissions United States Supreme Court New York District of Columbia United States Patent Bar United States Court of Appeals for the Second Circuit United States Court of Appeals for the Federal Circuit United States District Court for the Southern District of New York United States District Court for the Eastern District of New York Degrees J.D., Benjamin N. Cardozo School of Law M.P.H., Columbia University B.A., The Johns Hopkins University Awards & Distinctions Two-time Super Lawyers NYC Metro Rising Star Who's Who in American Law Notes Editor, Cardozo Journal of Law & Gender Alumnus, The Innocence Project, Benjamin N. Cardozo School of Law NIEHS Community & Preventive Medicine Fellow, Mount Sinai School of Medicine Recipient, Phoenix Fellowship, Columbia University Alumnus, Council on Legal Education Opportunity Winner, Black Bar Association of Bronx County Writing Competition Federal Acquisition Regulations Certificate HIPAA Research Compliance Certificate Publications Dayrel S. Sewell, Amulya Appalaraju, The Duality of the U.S. Supreme Court's Janus Decision, American Bar Association, Securities Litigation, 2015 Fall Newsletter. Dayrel S. Sewell, Andrew Fine, The "Redskins" Trademark: Turn-over on Downs, IPFrontline, October 2015. Dayrel S. Sewell, Ivan Ng, Pharrell Williams and Robin Thicke told they "Got To Give It Up", IPFrontline, May 2015. Dayrel S. Sewell, Ivan Ng, A ?Generic' Victory for Specific Fact-Findings, Intellectual Property Today, March 2015, at 34. Dayrel S. Sewell, Ivan Ng, A ?Generic' Victory for Specific Fact-Findings, IPFrontline, February 2015. Dayrel S. Sewell, Myriad Back in Court on Patent Subject Matter Eligibility, The Brooklyn Barrister, January/February 2015, at 9. Dayrel S. Sewell, The Ignominious Patent Troll, The Brooklyn Barrister, November 2013, at 5. Dayrel S. Sewell, The Ignominious Patent Troll, Intellectual Property Today, November 2013, at 12. Dayrel S. Sewell, Unanimous U.S. Supreme Court and Angelina Jolie: BRCA1 & BRCA2 Patentability, Intellectual Property Today, July 2013, at 24. Dayrel S. Sewell, Marc S. Ullman, The Regulation of Advertising for Dietary Supplements in the United States, KENKO SANGYO RYUTSU SHIMBUN (Health Trade Newspaper), April 8, 2007, at Issue 661. Tam T. Nguyen, Dayrel S. Sewell and Adrian S. Dobs. Oral Methyltestosterone Given to Post-menopausal Women Decreases Adipose Tissue and Increases Lean Muscle Mass with No Change in Muscle Strength. ENDO 2000 Abstracts. Category: Clinical Science: Aging. Medicine, Johns Hopkins University (2000). Speaking Engagements Dayrel S. Sewell, Brooklyn Bar Association Continuing Legal Education Speaker, Intellectual Property Fundamentals: What Every Attorney Needs to Know, May 2014. Dayrel S. Sewell, Legal Analyst (en espa?ol ), CNN "Realidades En Contexto": Nueva Jersey Agentes Inmobiliarios haber supuestamente Relaciones repetidas Dentro de una casa en venta, March 2014. Dayrel S. Sewell, Panelist, Managing Career Changes in a Changing Global Market, Union League Club, November 2013. Dayrel S. Sewell, Presenter, Professional Development, Bristol-Myers Squibb Legal Department Conference, June 2009. Other Licenses New York State Real Estate Broker New York State Notary Public Organizations Brooklyn Bar Association Vice-Chair, Intellectual Property Committee Vice-Chair, Real Property Committee New York County Lawyers' Association The Johns Hopkins University Law Affinity Committee
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