Wednesday, July 6th 2011, 4:00 AM — A Brooklyn judge has ordered the head of HSBC to appear in court and explain why it should not be penalized for submitting false documents in a foreclosure case.
In a scathing decision issued Friday, Supreme Court Justice Arthur Schack dismissed HSBC’s case against Bedford-Stuyvesant homeowner Ellen Tahrer as a “frivolous motion” and a “waste of judicial resources.”
HSBC failed to prove it even owned the $475,000 mortgage on Tahrer’s home, Schack ruled. Instead, its lawyers submitted documents from several notorious “robo-signers,” all of which claimed the original loan had been transferred to HSBC from Delta Funding Corp., the original lender, which declared bankruptcy in 2007.
Those documents were “replete with false statements,” Schack ruled. He ordered HSBC’s North American CEO, Irene Dorner, to appear July 15 to explain. (Dorner’s position was once held by William F. Aldinger, chairman and CEO of predatory lender Household International. HSBC bought Household International prior to the nation’s subprime crisis.
Tahrer, 55, the delinquent homeowner, still lives in the two-story home and had no idea what had happened with her case.
Laid off in 2009 as an office worker at American Express, Tahrer has been unable to make her $3,000 monthly mortgage payment.
“I went to legal aid for help and tried to get a mortgage modification, but had no success,” she said.
“A few months ago, the bank called and offered me $20,000 to get out of the house. I told them, I had no place to go.”
Schack’s decision freezes Tahrer’s status for perhaps another year or two.
With his tough stance on shoddy foreclosure filings, Schack has emerged as a folk hero among financially strapped homeowners.
In HSBC, he is tackling the ninth-largest bank in the U.S., and he has concluded that what happened goes beyond shoddy paperwork.
Last year, state Chief Judge Jonathan Lippman issued new regulations to address the massive problems in bank foreclosure filings.
They required bank officials and their lawyers to review and verify the accuracy of the documents they submit.
“We cannot allow the courts … to stand by idly and be party to what we now know is a deeply flawed process, especially when that process involves basic human needs – such as a family home,” Lippman said.
Schack gave all lenders in his court 60 days to comply with the new regulations.
Some banks had such a mess in their paperwork they did not even bother to meet the deadline, prompting Schack to dismiss scores of foreclosure cases.
HSBC spokesman Neil Brazil said in a statement yesterday the bank was “reviewing the court papers.”
HSBC’s role “was limited to that of a trustee” for an investment vehicle in mortgages, Brazil said. The bank, “did not service this loan and neither prepared or filed any of the legal documents presented to the court.”
Maybe bank chief Dorner can explain how a case titled “HSBC USA…v. Ellen N. Tahrer” has no direct connection to the bank.