HSBC reaches $470M deal with US, states over banking abuses

WASHINGTON (AP) — Banking giant HSBC has reached a $470 million settlement with the federal government and nearly all states over mortgage lending and foreclosure abuses that officials say contributed to the country's economic meltdown, the Justice Department announced today.

The agreement requires the bank to pay $100 million and to provide an additional $370 million in consumer relief to borrowers and homeowners, including reducing mortgage interest rates as well as the principal on mortgages for homeowners who are at risk of default.

The deal also requires the bank to improve standards for how it services loans and handles foreclosures.

Officials say those changes are intended to discourage past banking practices, such as robosigning and poor-quality loans, that played a part in the financial crisis starting in 2007 in which millions of Americans lost their homes to foreclosure.

"This settlement illustrates the department's continuing commitment to ensure responsible mortgage servicing," Benjamin Mizer, head of the Justice Department's Civil Division, said in a statement. "The agreement is part of our ongoing effort to address root causes of the financial crisis."