New York court dismisses foreclosure lawsuit against HSBC

(Recasts lead, adds quote)

By Jonathan Stempel and Karen Freifeld

March 31 (Reuters) - A New York judge this week dismissed a lawsuit filed by the state's attorney general that accused HSBC Holdings Plc of ignoring a law designed to protect homeowners from foreclosure.

The lawsuit, filed in 2013 by New York Attorney General Eric Schneiderman, alleged HSBC violated a state law requiring lenders to file paperwork, known as a request for judicial intervention, which entitles homeowners to settlement conferences within 60 days to negotiate loan modifications. (http://reut.rs/1xVcVHL)

Justice John Michalski of New York State Supreme Court in Buffalo dismissed the case on Monday, ruling that HSBC's delay or failure in filing the administrative paperwork was procedural, not substantive, and did not qualify as an "illegal act," according to a copy of the decision seen 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.

Matt Mittenthal, a spokesman for the New York attorney general, said the office had not decided whether to appeal. "Despite this ruling, Attorney General Schneiderman will continue to fight for families struggling to recover from the housing crisis," he said. (Writing by Shubhankar Chakravorty and Ankush Sharma in Bengaluru; Editing by Ken Wills and Anupama Dwivedi)