Consumer complaint received 2021-03-08
Product: Mortgage — Conventional home mortgage
Issue: Applying for a mortgage or refinancing an existing mortgage — 
Company: HSBC NORTH AMERICA HOLDINGS INC. (NY)

In XXXX XXXX, HSBC approached us by phone saying we were eligible to refinance our existing mortgage. We own a XXXX  apartment in XXXX. Our current mortgage, a $ XXXX XXXXyear fixed loan, was originated by HSBC back in XXXX. 

The bank offered a very attarctive rate of 2.25 % for a XXXX-year term fixed mortgage, and we took their offer shortly after. We submitted an application for a $ XXXX refinance on XX/XX/XXXX, and locked the rate on XX/XX/XXXX. 

Our XXXX XXXX management company and ourselves were very diligent in submitting all the required documentation : proof of income, XXXX  questionnaire, credit check, appraisal was done on time, etc. It's worth noting that the mortgage being requested is approximately half of the appraised value of the unit, and that our combined gross annual income is over $ XXXX. 

One of the items HSBC had identified as an issue were XXXX XXXX XXXX XXXX XXXX XXXX violations identified in the lien search. HSBC requested an indemnity letter from the XXXX 's management, which they received on XX/XX/XXXX. 

On XX/XX/XXXX, with less than two weeks remaining on our rate lock ( rate lock expires on XX/XX/XXXX ), HSBC suddenly expects those XXXX violations to be cured in order to close. By letter dated XX/XX/XXXX and again XX/XX/XXXX the XXXX agreed to indemnify HSBC for all of the existing violations.

We pointed out there have been several mortgages in our XXXX  that HSBC has closed recently even though there are XXXX violations. We asked for an explanation of why our mortgage is being held up, and asked to see the indemnification letters that allowed the other mortgages to proceed so that we can review the scope of the indemnification with the management company and get a revised letter that would be acceptable to HSBC. We even pointed out that they can redact the letters to protect names and personal information. Everything we have pointed out and asked for has fallen on deaf ears, with the HSBC representatives involved in this mortgage application providing absolutely no constructive information. 

After pressing the issue several times, asking to speak to managers, we were finally told that the rate that HSBC offered was based on selling it to XXXX  XXXX  and that XXXX  XXXX has certain criteria and restrictions, and were referred to XXXX XXXX Selling Guide. We were told that HSBC could not close on the loan at the locked rate of 2.25 % unless the violations were cured and we were instead offered a mortgage at a rate of 3.492 % - essentially the same rate that we currently have. This is simply unacceptable. 

In the Selling Guide, XXXX XXXX points out title exceptions in B7-2-05 ( XX/XX/XXXX ) : XXXX XXXX  will not purchase or securitize a mortgage secured by property that has an unacceptable title impediment, particularly unpaid real estate taxes and survey exceptions ( emp. added ). Neither real estate taxes, nor survey exceptions are at issue here. 

The XXXX XXXX Selling Guide goes on to state that minor title impediments must not materially affect the marketability of the property. The lender must indemnify XXXX XXXX ( as described in A2-1-03, Indemnification for Losses ) for any Fannie Mae losses that can be directly attributed to the impediment ( s ). Again, please note that the violations at issue here do not materially affect the marketability of the property. According to data publicly available, there are hundreds of thousands of currently open XXXX violations issued to buildings throughout XXXX. The violations identified in the lien report were not issued to our unit, they were issued to a complex consisting of approximately 800 units ; they amount to {$20000.00} ( please note that our unit alone was appraised by HSBC at {$760000.00}, and we are only asking for a mortgage of {$380000.00} ) ; and most significantly the co-op has issued an indemnification letter to HSBC for all of the violations, which clearly would meet XXXX XXXX guidelines. After reviewing the XXXX XXXX Selling Guide, we see no way that these XXXX violations which are all minor in nature could be interpreted by a reasonable person to fall within the definition of a title exception that would preclude closing on our mortgage at the locked rate. 

If HSBC interprets open XXXX violations as conditions that would preclude closing mortgages that they intend to sell to XXXX XXXX then that means that most of the apartments in XXXX are ineligible, and thus, HSBC should not be marketing these rates here. If HSBC has closed on mortgages with open XXXX violations then all we are asking for is to share the criteria and examples of the documentation that are acceptable so that we can obtain it and move forward. This is all we are asking for and which the HSBC mortgage team refuses to provide, and instead they give us the runaround presumably with the intent to run out the clock on the refinancing rate lock period. 

This leads us to one of two alarming conclusions : 1 ) HSBC has been operating in bad faith, deceptive marketing and predatory lending practices ; and/or 2 ) HSBC is engaging in mortgage discrimination. 

We would appreciate your assistance in getting this matter resolved, as we believe we're being treated unfairly. 

We're including the indemnity letter the bank deems unacceptable as an attachment.