Class of Veterans Sues HSBC Over Foreclosures
MINNEAPOLIS (CN) - HSBC Mortgage Services illegally foreclosed on homes of dozens of veterans on active duty, without giving them the chance to seek judicial stay, a National Guardsman claims in a federal class action.
Lead plaintiff Philip M. Harry claims HSBC Mortgage Services violates the Servicemembers Civil Relief Act.
Harry, an Army National Guardsman who served as a sergeant in Iraq from June 2008 to June 2009, says he learned his home had been foreclosed upon and sold when his parents forwarded his mail to him in Iraq.
Harry says he was ordered to report to Fort Sill, Okla., for active duty on April 15, 2008, and that HSBC began foreclosing upon his home that very day. HSBC "attempted service" at his home on April 21, but Harry was not there.
"Mr. Harry received no notice of the pending foreclosure," the complaint states. "Interestingly, Mr. Miller's [hired by a law firm to serve notice of sheriff's sale] affidavit was not notarized until June 3, 2008."
HSBC bought his home at foreclosure on June 4, 2008, for $32,605, though its assessed value then for county tax was $141,000, the complaint states.
Harry says he had no idea his home was being sold.
The complaint states: "On June 3, 2008, an associate of the firm of Reiter & Schiller, P.A., executed and later filed an affidavit, purporting to be upon personal knowledge that, after 'inquiry by' unidentified 'agents of the mortgagee,' Mr. Harry 'was not in the military or naval service of the United States.' See affidavit attached hereto as Exhibit A. Such affidavit was factually incorrect. It was made without personal knowledge of the facts and in reckless disregard of its truth and falsity. Not only was the affidavit false but, had HSBC Mortgage or its agents checked easily available records maintained by the Department of Defense, it would have known that it was false. Furthermore, defendant made no attempt to determine Mr. Harry's military status in any way, including by contacting him directly."
Harry claims that on April 13, 2011, HSBC Mortgage's corporate parent, HSBC North America Holdings Inc. (HNAH), entered into a Consent Order with Board of Governors Federal Reserve System.
According to the complaint: "the Federal Reserve alleged that HNAH's 'Mortgage Servicing Companies' had engaged in numerous illegal activities: filing affidavits in state courts 'based on personal knowledge or based on a review by the affiant of the relevant books and records, when, in many cases, they were not based on such knowledge or review;' 'failed to respond to a sufficient and timely manner to the increased level of foreclosures by increasing financial, staffing, and managerial resources to ensure that the Mortgage Servicing Companies adequately handled the foreclosure process;' failed to have adequate internal controls, policies and procedures, compliance risk management, internal audit, training, and board oversight of the foreclosure process, including sufficient oversight of outside counsel ... handling foreclosure related services.'" (Ellipsis in complaint.)
At the time, HNAH was the 12th largest services or residential mortgages in the country, with a portfolio of 892,200 residential mortgage loans, according to the complaint.
It adds: "As part of the Consent Order, HNAH agreed to an 'independent review of certain residential mortgage foreclosure actions ... to determine ... whether the foreclosure was in accordance with applicable state and federal laws, including but not limited to, the Servicemembers Civil Relief Act ... .'" (Ellipses in complaint.)
Harry claims that review turned up "a total of 87 foreclosures with an SCRA identification" - from HSBC alone, from Jan. 1, 2009 through Dec. 31, 2010.
Harry claims he and his class have lost their homes, incurred additional expenses in trying to redeem or reinstate their mortgages and have suffered damage to their credit. He seeks class certification and compensatory and punitive damages for conversion and violations of the Servicemembers Civil Relief Act.
He is represented by Vildan Teske with Crowder Teske.
For his service in Iraq, Sgt. Harry was awarded the Army Commendation Medal, the Army Achievement Medal, the National Defense Service Medal, the national Terrorism Service Medal, the Army Overseas Service Medal, and the Armed Forces Reserve Medal, according to the complaint.