A lawsuit filed today in U.S. District Court alleges HSBC Mortgage Services illegally foreclosed on the homes of active-duty service members in Minnesota and other states.
The Minnesota Attorney General's Office says it has been receiving complaints about such foreclosures.
The AG's office will not identify the lenders or servicers involved but spokesman Ben Wogsland said citizens have complained they were subject to illegal foreclosures while on military duty.
"We cannot confirm or deny an investigation. That investigative data is protected in that fashion until we file a lawsuit," Wogsland. "We have not yet filed a lawsuit in that regard. So, I can't really get into the details on that. But it is something we are aware of."
Federal law generally prohibits foreclosures against servicemembers on active duty. The lawsuit seeks class action certification and was filed on behalf of Philip Harry of Zimmerman, Minn. He was in Iraq in 2008 when he lost his home. HSBC did not comment.
"You're in a war zone, and you get a letter from your parents saying, 'We just found out your home has been foreclosed and they've taken possession.' " said attorney Richard Fuller represents Harry. "And, of course, it was fairly early in his service, there was nothing he could do. He couldn't go back home."
Fuller says he suspects such foreclosures by HSBC are widespread, because federal regulators ordered HSBC to review its foreclosure procedures for alleged misconduct. HSBC declined to comment, saying it does not discuss ongoing litigation.