Move over, Wells Fargo there is actually a bank that might have a worse reputation among customers. HSBC. The British banking giant is in constant trouble worldwide and they aren’t making friends with their U.S. customers either.
This week HSBC sought court approval to pay off homeowners who were billed for unnecessary and unauthorized bank fees for default related services. In typical big bank double speak, HSBC said it was denying all the charges yet was going to repay all the affected U.S. homeowners. In announcing the settlement, the bank said, “Nevertheless, HSBC also recognizes the risks and uncertainties inherent in litigation, the significant expense associated with defending class actions, the costs of any appeals, and the disruption to its business operations arising out of class action litigation.”
As class action lawyers, we understand our primary duty is to protect our clients (homeowners). Yet we wish that one day, some senior bank official will have the guts to simply say, “Hey we were wrong, and we are sorry.” [The apology has to be sincere to count. We are aware that Wells Fargo continuously apologizes, sort of, until it gets caught financially raping their customers again.]
The lawsuit against HSBC started with a homeowner. Dawn Tardibuono – Quigley filed suit in Manhattan in 2015. She filed suit not only on her behalf but on behalf of all other HSBC customers with similar claims against the bank.
Ms. Tardibuono – Quigley said HSBC unlawfully charged fees to her and other homeowners that had fallen behind on their mortgage payments. The illegal fees were related to property inspections and broker price opinions (“BPOs”).
She claimed that when homeowners fell behind on their mortgage payments, HSBC “utilized an automated computer system to regularly and systematically assess fees for property inspections and BPOs of mortgaged properties that were unnecessary. This scheme allegedly violates the express terms of the [mortgage agreements], which preclude the assessment of fees for services that are not needed or necessary. [HSBC] automated computer system allegedly ordered property inspections and BPOs on mortgaged properties without regard for whether they were necessary, or whether they were permitted under mortgage agreements.”
In simple terms, instead of helping struggling homeowners trying to save their homes, HSBC instead piled on unnecessary bank fees.
In 2008, banks around the world came to taxpayers hat in hand and asked for a bailout. U.S. taxpayers shelled out almost a trillion of dollars of money through a vehicle known as the Troubled Asset Relief Program or “TARP.” In return, Congress told banks they had to help struggling homeowners.
Does charging unnecessary and unauthorized bank fees help homeowners? Of course not although HSBC continues to deny the allegations.
It should be noted the other defendant in this lawsuit is PHH Mortgage, the same PHH that merged with OCWEN. Ocwen and PHH are to the loan servicing world what HSBC and Wells Fargo are to the lending world [We have plenty of OCWEN posts on our site, start with our OCWEN Fraud Investigation and Ocwen Resources pages.]
Under the settlement, HSBC will pay all affected homeowners as follows:
(a) Each Approved Claimant from New York with a non-coop property shall be paid 230% of the total amount of bank fees assessed for property inspections and/or BPOs;
(b) Each Approved Claimant from New York with a coop shall be paid 230% of the total amount of fees assessed for property inspections and/or BPOs;
(c) Each Approved Claimant from a state other than New York shall be paid 100% of the total amount of fees assessed for property inspections; and
(d) Each Approved Claimant from a state other than New York shall be paid 100% of the Total amount of fees assessed for BPOs that meet the Specified Criteria
HSBC also must pay for the legal fees of the homeowners who brought the class action.
For outsiders reading this post, it may appear that the case is a slam – dunk. It wasn’t.
Class actions are disfavored these days. The Class Action Fairness Act passed by Congress may have a great sounding title but it doesn’t make things “fair” for homeowners. It is weighed heavily in favor of the business community.
Individual homeowners will never have the financial ability to bring an individual case against a big bank for a few hundred bucks in fees. We assume that the bank didn’t need constant appraisals and broker price opinions in 99% of these cases. But find a lawyer that will take on a big bank over a $200 fee dispute. It isn’t cost effective to do so for a single client and therefore the banks know they can get away with these schemes.
Heck, most homeowners don’t understand the confusing and often contradictory statements they receive in the mail. HSBC claimed these fees were “Auto Ppy Inspec,” “BPOO FLIP” and “BPO Cost.” And if a homeowner does ask and gets an answer, unless the homeowner is an experienced contracts lawyer, how would the homeowner even know these fees were not legal?
Congress has set a very high standard for class actions. They want plaintiffs to show “commonality.” Maybe in 1% of the cases, the local marketplace is changing so rapidly that these constant inspections and broker price opinions were reasonable. But if even 1% might be legit, that suggests a class action isn’t appropriate because the liability is different in each case.
HSBC Not Alone, Many Others Improperly Charging Bank Fees
HSBC doesn’t have the market cornered on illegal bank fees. (Remember, we need to be careful in our words as HSBC is settling without any admission in wrongdoing. The allegations in the complaint against HSBC are just that, allegations.)
We are currently investigating OCWEN, Freedom Mortgage, LoanDepot, Money Source, Wells Fargo and others for mortgage underwriting and servicing improprieties involving fees.
Some of the things we are investigating include:
- Improper bank fees for appraisals (underwriting)
- Improper fees for appraisals (servicing)
- Improper appraisal and related fees (special servicing / defaults / workouts)
- Other improper fees
- Use of a proprietary software known to trigger unsupported fees and speed foreclosures (an example is Ocwen’s REAL Servicing)
- Knowing use of infirm loan data
- Improper and Illegal foreclosures
- Failure to credit borrowers’ payments
- Mismanagement of escrow accounts (taxes and insurance)
- Manufactured force-placed insurance
- Delayed termination of private mortgage insurance
- Charges for additional products without consent (includes credit insurance)
- Mishandling accounts for deceased borrowers
- Failure to correct errors identified by the borrower
We know the violations are everywhere. Residential underwriting and mortgage servicing have become a cesspool of illegal practices. Instead of helping struggling homeowners remain in their homes, many financial institutions exploit the situation and instead see how much money they can squeeze from the homeowner.
As noted above, we struggle daily with the legislative mandates under the Class Action Fairness Act. We can only bring a class action case if we can demonstrate there is significant “commonality” in the damages suffered by class members. That means illegal foreclosures probably can’t be brought as a class (every homeowner has different damages). What may be possible, however, is a class where everyone was wrongfully charged the same improper bank fees.
Another hurdle is the advent of class action waivers and mandatory arbitrations. Many loan documents now include language in which the homeowner / borrower gives up the right to sue! We are living in an age when courts say that it is okay for a contract to contain language in which a borrower waives his or her Constitutional right to a jury trial.
We continue to seek new class cases involving illegal behavior by the banks. To see if you have a case, contact us online, by email or by phone 202-800-9791. All inquiries are protected by the attorney client privilege and kept confidential. Class action cases are accepted on a contingent fee basis meaning you never have to advance us any monies. We get paid only if you get paid.
Special Word to Whistleblowers: Our unique law practice began in the financial services space. In fact, we began by representing mortgage officers and bank employees who were tired of watching customers get screwed, of watching laws being flouted and of banks execs getting ridiculous performance bonuses.
We still represent whistleblowers today. If you have inside information about misconduct by a bank, call us. We are happy to see if your information qualifies you for an award. And even if it doesn’t, we would still like to talk to you. If nothing else, your off-the-record help might help us to help homeowners.