Delaware Borrowers To Benefit From National Settlement With HSBC To Address Mortgage Loan Abuses

Agreement to provide certain Delaware borrowers with loan modifications; foreclosed HSBC loans may be eligible for payments for past abuse

A state-federal settlement with mortgage lender and servicer HSBC will provide direct payments to Delaware borrowers for past foreclosure abuses, loan modifications and other relief for borrowers in need of assistance, rigorous mortgage servicing standards, and grants oversight authority to an independent monitor.

Attorney General Matt Denn joined the federal government and other state attorneys general today in announcing the settlement with HSBC to address mortgage origination, servicing, and foreclosure abuses.

The settlement includes Delaware and 48 other states, the District of Columbia, the U.S. Department of Justice (DOJ), the U.S. Department of Housing and Urban Development (HUD), and the Consumer Financial Protection Bureau (CFPB).

“This settlement provides relief to previous and current Delaware borrowers and compels HSBC to treat its borrowers much more fairly in the future,” Attorney General Matt Denn said. “This company will have to change its practices and raise its standards for how it treats consumers, as other companies have through others settlements in recent years. The irresponsible practices of the mortgage industry that led to the housing crisis and recession are continuing to change as a result of actions like these.”

Loan Modifications and Payments to Borrowers

The HSBC agreement requires the company to provide eligible Delaware borrowers with loan modifications or other relief. The modifications, which HSBC chooses through an extensive list of options, include principal reductions and refinancing for underwater mortgages. HSBC decides how many loans and which loans to modify, but must meet certain minimum targets. Because HSBC receives only partial settlement credit for many types of loan modifications, the settlement will provide relief to borrowers that will exceed the overall minimum amount.

Approximately 240 eligible Delaware borrowers whose loans were serviced by HSBC and who lost their home to foreclosure from January 1, 2008 through December 31, 2012 and encountered servicing abuse will be eligible for a payment from a national $59.3 million fund for payments to borrowers. The borrower payment amount will depend on how many borrowers file claims.

Eligible borrowers will be contacted about how to qualify for payments.

Mortgage Servicing Standards

The settlement requires HSBC to substantially change how it services mortgage loans, handles foreclosures, and ensures the accuracy of information provided in federal bankruptcy court.

The terms will prevent past foreclosure abuses, such as robo-signing, improper documentation and lost paperwork.

The settlement’s consumer protections and standards include:
• Making foreclosure a last resort by first requiring HSBC to evaluate homeowners for other loss mitigation options;
• Restricting foreclosure while the homeowner is being considered for a loan modification;
• Procedures and timelines for reviewing loan modification applications;
• Giving homeowners the right to appeal denials;
• Requiring a single point of contact for borrowers seeking information about their loans and maintaining adequate staff to handle calls.

Independent Monitor
The National Mortgage Settlement’s independent monitor, Joseph A. Smith Jr., will oversee HSBC agreement compliance for one year. Smith served as the North Carolina Commissioner of Banks from 2002 until 2012, and is also the former Chairman of the Conference of State Banks Supervisors (CSBS). Smith will oversee implementation of the servicing standards required by the agreement; impose penalties of up to $1 million per violation (or up to $5 million for certain repeat violations); and issue public reports that identify whether HSBC complied or fell short of the standards imposed by the settlement.

Additional Terms
The agreement resolves potential violations of civil law based on HSBC’s deficient mortgage loan origination and servicing activities. The agreement does not prevent state or federal authorities from pursuing criminal enforcement actions related to this or other conduct by HSBC, or from punishing wrongful securitization conduct that is the focus of the Residential Mortgage-Backed Securities Working Group. Additionally, the agreement does not prevent any action by individual borrowers who wish to bring their own lawsuits.

HSBC Agreement Closely Mirrors National Mortgage Settlement
The agreement’s mortgage servicing terms largely mirrors the 2012 National Mortgage Settlement (NMS) reached in February of 2012 between the federal government, 49 state attorneys general, including Delaware, and the five largest national mortgage servicers. That agreement provided consumers nationwide with more than $50 billion in direct relief, created new servicing standards, and implemented independent oversight. A subsequent state-federal agreement with SunTrust Mortgage Inc. worth nearly $1 billion was announced in June of 2014.

The agreement will be filed as a consent judgment in the U.S. District Court for the District of Columbia.

The HSBC settlement regarding mortgage loan activities is separate and distinct from the settlement reached with some banks over securities related activities. There is no direct payment to the State of Delaware in the settlement announced Friday; all relief in Delaware is directed to consumers.


Attorney General Warns Delawareans About Fraudulent Fundraising Calls to Support “Delaware Firefighters Foundation”

Attorney General Matt Denn warns Delawareans to be wary of potentially unauthorized telephone solicitations involving the “Delaware Firefighters Foundation” supposedly on behalf of local fire companies and firefighters.

The calls display a local (302) area code, and the callers request donations for the “Delaware Firefighters Foundation,” or they claim to be soliciting funds for “your local fire company” or “injured firefighters in your area,” without actually identifying the fire company or firefighters by name. There is no known charitable organization registered under “Delaware Firefighters Foundation” in Delaware or with the IRS Exempt Organization Division.

“It’s sad that someone is trying to take advantage of the respect we have and support we want to provide to our Delaware firefighters,” said Attorney General Matt Denn. “As consumers, we have the right to know who we are giving our money to and how it will be spent. So people should ask those questions and be very suspicious if they don’t get an answer.”

Delaware law requires callers to supply you with certain information, including:
Whether they are a paid fundraiser;
Where they are calling from, including company name and location;
The charity for which the funds are being raised;
The amount of the consumer’s donation that will actually go to the charity; and
If they are calling on behalf of police, fire or law enforcement, they must either be an actual law enforcement employee or have written permission from the state, county or local first responder organization to make the call.

The Attorney General’s Consumer Protection Unit reminds you to never give your credit card or bank account information in response to one of these calls. If you are interested in donating to your local fire company, the Attorney General encourages you to visit your local firehouse to drop off your donation in person, or donate directly to the fire company another way. Someone calling you to make a legitimate telephone solicitation on behalf of a Delaware fire company (or any charitable organization) should be willing to mail you a written donation form and envelope to send in a pledge. A list of all local fire companies in Delaware and their contact information can be found at the Office of the State Fire Marshal.

Anyone who suspects they have been scammed or have received a suspicious solicitation, the Attorney General encourages donors to call the Attorney General’s toll-free Consumer Hotline at 1-800-220-5424 or email the Attorney General’s Consumer Protection Unit at consumer.protection@delaware.gov.


Two Men Indicted for 2013 Murder for Hire

A New Castle County grand jury handed up indictments against 44-year-old Ryan Shover of York, PA, and 51-year-old Michael Kman of Enola, PA on Jan. 19, 2016, in connection with the 2013 death of 43-year-old Wayne Cappelli of Claymont. Both are charged with two counts of First Degree Murder, Possession of a Deadly Weapon During the Commission of a Felony, Conspiracy, and Insurance Fraud.

Cappelli was found dead on February 18, 2013 in the brush off the road of the 2100 block of Delaview Avenue in Silvercroft in Brandywine Hundred, with severe blunt force trauma to his body.

An investigation uncovered Cappelli obtained a large life insurance policy as recently as three months before the incident, naming an acquaintance as beneficiary. As the investigation continued, detectives were able to determine that this murder investigation was likely a planned murder for the collection of the life insurance money.

The investigation was a multi-agency effort led by Sergeant Tom Orzechowski of the New Castle County Police along with the Department of Justice, and included the FBI, the East Pennsboro Township Police, and the York Regional Police Departments in Pennsylvania.

“We appreciate the hard work and cooperation of everyone involved in this case, knowing how difficult it is to bring justice to those responsible in cold cases” said Attorney General Matt Denn.” Thanks to the tireless work of the police agencies involved, along with our team from the Department of Justice we were able to do just that for the family of Mr. Cappelli.”

“This is another example of our detectives working relentlessly on cases, even as complex as this one,” said Colonel Elmer Setting, Chief of the New Castle County Police. “Their tireless efforts have helped bring those accountable for this murder to justice along with closure to the family and friends of Mr. Cappelli. Our Criminal Investigation Unit, with critical support from the office of the Attorney General, continues to make arrests in these major investigations.”

“As I have said before, and let me be clear, if you commit murder in New Castle County, we will find you and ensure that justice is served.”

Mr. Shover is being held at the Howard R. Young Correctional Institution in Wilmington. Mr. Kman is in custody in Pennsylvania awaiting sentencing on unrelated charges, and will return to Delaware after those proceedings.


Department of Justice Investigation Leads to Indictment and Arrest of Sussex County Couple for Stealing From Homeowners’ Association

Following an investigation by the Department of Justice’s Common Interest Community Ombudsperson and DOJ’s Consumer Protection Unit, Jessica McGinnis, 33, and her husband David, 50, both of Bridgeville, were arrested in connection with theft from the Morningside Village Homeowners’ Association after being indicted by a grand jury.

Unpaid bills to maintain the community sewage system led to the investigation. Bank records show money deposited into a fund for the system maintenance was instead depleted by checks written to Mr. and Ms. McGinnis, for a total amount of $20,167.63. Ms. McGinnis, took over as secretary/treasurer of the association in 2012. Each face four counts of Second Degree Conspiracy and Theft Greater than $1,500.

“This theft deprived an entire community of needed funds for maintenance. This thorough investigation is proof that we take complaints about homeowners’ associations and communities seriously, and will prosecute those who abuse the trust of their neighbors,” said Attorney General Matt Denn. “I want to thank Deputy Attorney General Christopher Curtin who is our Common Interest Community Ombudsperson, and Deputy Attorney General Stephen McDonald for their hard work.”

In all cases, defendants are presumed innocent until and unless proven guilty.


Department of Justice Prosecutors Secure Guilty Verdict in First Degree Murder Case

Maurice Cruz-Webster, 21, of Wilmington, charged with the January 2015 killing of 23-year-old Kyrell Lewis in front of an Arbor Place home in New Castle, was found guilty of First Degree Murder, Reckless Endangering First Degree and two counts of Possession of a Firearm During the Commission of a Felony by a New Castle County Superior Court jury this week.

Deputy Attorneys General James Kriner and Annemarie Puit prosecuted the case, leading to Cruz-Webster’s conviction.

Cruz-Webster and Lewis became involved in an argument outside of Lewis’s home on Parma Avenue on January 9, 2015, during which Cruz-Webster fired a handgun seven times, striking Lewis several times. Witnesses who heard and saw the argument called police. Lewis was taken to Christiana Hospital where he died as a result of the shooting.

“This verdict reinforces the importance of witnesses coming forward to help bring criminals to justice,” said Attorney General Matt Denn. “Thanks to eyewitness cooperation, and the outstanding work of our prosecutors and the New Castle County Police, a jury has brought justice to Kyrell Lewis’s family, and made our streets safer.”

When sentenced in March 11, 2016, Cruz-Webster faces a mandatory life sentence.