HSBC Holdings Plc (NYSE:HSBC) (LON:HSBA) has been sued by the New York state Attorney General Eric Schneiderman on Tuesday. The lawsuit alleged that HSBC Holdings Plc (NYSE:HSBC) (LON:HSBA) violated the foreclosure law by not filing paperwork to initiate settlement conferences. That put hundreds of homeowners at the risk of losing their houses, report Lina Saigol and Kara Scannell of the Financial Times.

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Mr. Schneiderman’s lawsuit seeks to recover the unfair mortgage charges. It is yet another setback for HSBC Holdings Plc  (NYSE:HSBC) (LON:HSBA) in the United States. A few months ago, the British bank agreed to pay $1.9 billion to settle money laundering charges. The Department of Justice had accused HSBC Holdings Plc  (NYSE:HSBC) (LON:HSBA) of willfully not maintaining an effective money laundering program and dealing with the enemies of the United States.

Mr. Schneiderman has alleged that the bank failed to file the necessary paperwork in several foreclosure cases which would have resulted into a settlement conference with homeowners. Meanwhile, it continued to charge fees and interest. It increased the money homeowners owed to the bank and deprived them of qualifying for a relief. HSBC Holdings Plc  (NYSE:HSBC) (LON:HSBA) said it is committed to comply with the regulations.

HSBC’s Household Subsidiary

Most of the cases stemmed from the bank’s Household subsidiary that has earlier caused billions of dollars in losses for the bank during the financial crisis. Under the New York state law, mortgage lenders, servicers and their agents who sue to foreclose on residential homeowners must file a court-supervised intervention. The law gives homeowners 60 days of time to attend a settlement conference, where they can negotiate an alternative to foreclosure.

Attorney General Eric Schneiderman’s investigators found about 25,000 foreclosure cases across the New York state where lenders have delayed filing paperwork to initiate a settlement conference. In some cases, it has been delayed by several years. Meanwhile, they kept charging fees, interests and penalties.

American shares of HSBC Holdings Plc  (NYSE:HSBC) (LON:HSBA) shares were up 0.13 percent to $55.77 at the end of the trading session.