Our client had been sued by HSBC, one of the world’s largest banks (its initials stand for Hong Kong Shanghai Banking Corporation). In 2010, my client’s employer cut back on his overtime hours, and this caused a decrease in take-home pay. During the build-up to the housing bubble, HSBC acquired hundreds of thousands of U.S. mortgages from smaller lenders. Many banks got bailed out, but HSBC did not, and now claims that since it did not take any federal bailout money, it does not have to adhere to federal guidelines to modify mortgage loans, or engage in what I call reasonable settlement/resolution practices.
HSBC, therefore, demanded that the only way to reinstate my client’s delinquent loan was for the him to come up with 40% of the arrears. For homeowners that have been in foreclosure for a year or more, this often means that HSBC will not modify the mortgage unless the homeowners has tens of thousands of dollars to put down towards the new loan. In my client’s case, as in the case of most homeowners, this was not possible.
This scenario causes, in my view, more trials than are necessary since it is so difficult to settle by a loan modification. In this trial which started on November 27, 2013, the results ended favorably for my client. In this Philadelphia County case, HSBC was demanding that my client come up with over $60,000 in order to reinstate his mortgage loan (which already contained a 10.9% interest rate). My client rejected the offer, and the case proceeded to trial. Midway through the trial, HSBC made an offer to let our client remain in the home for almost another 12 months, and to waive the entire unpaid loan amount of $177,000. The case has been in litigation for nearly 3 years so this was a fantastic result for my client. The terms of the settlement were put on the record in front of the judge.
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