New York court dismisses foreclosure lawsuit against HSBC

By Jonathan Stempel and Karen Freifeld

March 31 (Reuters) - A court in Buffalo, New York, dismissed a petition on Monday filed by New York state, alleging that HSBC Holdings Plc ignored a law designed to protect homeowners from being thrown into foreclosure without getting a chance to renegotiate their mortgages.

The lawsuit filed by Attorney General Eric Schneiderman in 2013 accused HSBC of letting foreclosure cases languish by ignoring a state law intended to give as many as 25,000 homeowners a chance to negotiate loan modifications. (http://reut.rs/1xVcVHL)

New York State Supreme Court justice John Michalski said delays in HSBC's filing its paperwork related to the foreclosures did not qualify as an "illegal act" under the state law that Schneiderman said the bank violated, according to a copy of the decision reviewed by Reuters.

"The mere possibility" that HSBC might have violated the law "cannot serve as the basis" for the lawsuit, Michalski said.

Rob Sherman of the media relations team at HSBC told Reuters: "We of course agree with the court's decision to dismiss the case, and remain committed to ensuring that struggling homeowners are treated fairly."

The decision could not immediately be located in court records.

"The attorney general has not yet decided whether to appeal," Matt Mittenthal, a spokesman for the New York Attorney General, told Reuters. (Writing by Shubhankar Chakravorty in Bengaluru; Editing by Ken Wills)