As per the court filings, HSBC Bank USA and HSBC Mortgage Corp failed to file request for judicial intervention forms, which allows a homeowner to discuss with its lender to find out other mutual way of settling the case.
While carrying out the foreclosures procedure against borrowers, it is essential for lenders to file a proof of service, or legal notice of the foreclosure, with a county clerk.
Accusing the bank for its illegal practices, Schneiderman said, "Companies like HSBC are brazenly ignoring state law, leaving homeowners across New York stuck in legal limbo where they can’t even get the legally required settlement conference that could help them keep their homes."
Schneiderman’s office said that the bank kept aside filings of necessary document for foreclosure for nearly two years in some cases, and during this period it was continuously charging interest, fees and other penalties from home owners.
A spokesman for HSBC said that the bank "is committed to complying with the law when it comes to foreclosure" and that the bank would respond to the court case.
The lawsuit seeks to get back restitution and damages for homeowners and an order requiring HSBC to file the required papers in pending foreclosure cases.
In 2012, New York inked a $25bn a settlement agreement with five mortgage servicing banks including Bank of America and Wells Fargo & Co, for violating foreclosure practices.