By ALLISSA KLINE
akline@bizjournals.com | 716-541-1612

HSBC Bank USA N.A. has suspended home foreclosures indefinitely and could face regulatory fines or actions related to its foreclosure practices, according to a recent government filing.

The bank disclosed in its 2010 financial report, filed Feb. 28 with the U.S. Securities and Exchange Commission, that it has halted all foreclosures for now as a result of receiving a "supervisory letter" from the Office of the Comptroller of the Currency. The letter noted "certain deficiencies in the processing, preparation and signing of affidavits and other documents supporting foreclosures and in the government of and resources devoted to (HSBC's) foreclosure processes, including the evaluation and monitoring of third-party law firm retained to effect (HSBC) foreclosures."

A similar letter was sent by the Federal Reserve to HSBC Finance Corp. and HSBC North American Holdings Inc., the filing said.

As a result, the bank has stopped foreclosures until it deals with the aforementioned deficiencies. It said it is currently "reviewing foreclosures where judgment has not yet been entered and will correct deficient documentation and re-file affidavits where necessary." Home-owners facing foreclosure will be allowed to remain in their homes until the foreclosure sales are complete.

HSBC spokesperson Neil Brazil said the bank suspended foreclosures on all accounts earlier this year. He declined to provide the bank's total amount in foreclosed properties, saying the bank "is not one of the larger players" in the mortgage business. The average delinquency at the time of a foreclosure sale is 400 days and foreclosures are viewed as a last resort, he added.

In its annual report, HSBC told shareholders the bank could face additional costs and expenses in connection with the investigation. Unspecified actions to address the bank's foreclosure practices are expected to "require significant financial and managerial resources" and could include yet-unknown fines and civil penalties, the bank said.

HSBC's disclosure is in line with recent announcements by other major banks, including JPMorgan Chase and U.S. Bancorp, whose foreclosure practices are being reviewed. Brazil said the bank would resume foreclosure when it is certain that new foreclosure procedures are fully in place.

"We expect that to be soon," he said.

HSBC is the largest bank in Western New York. It reported net income of $1.6 billion for 2010, up from a loss in 2009 of $142 million, while the 2010 net income of its parent company, HSBC Holdings PLC in London, more than doubled to $13.2 billion.