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HSBC Mortgage Corp. - Wholesale - Agency, Alt-A, Subprime

2008-11-18

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stories: wsj.com

Update - 2008-11-20: The Buffalo News and local station WIVB are reporting that HSBC will cut 225 jobs at its Depew, NY operations center. Quoting spokesperson Kate Durham, Buffalo News said "Employees were notified Tuesday of the layoffs, although they will stay on for 60 days." About "100 account executives scattered nationwide" were also let go.

In an announcement to Wholesale and Correspondent brokers today, HSBC Mortgage Corp. said it would cease conducting business through those channels effective immediately:

"We wish to advise you that unprecedented market conditions have made it necessary for HSBC Mortgage Corporation (USA) to cease Wholesale/Correspondent origination operations effective immediately. HSBC Mortgage Corporation (USA) will continue to process any loans that are registered as of November 18, 2008. Floating loans registered as of November 18th, 2008 must be locked by December 2, 2008. All loans will have until January 20, 2009 to fund. There will be no fundings after January 21, 2009."

According to one tipster, HSBC laid off "380+ people from the Northeast Wholesale Lending Division." AE's learned they were terminated on a conference call about the shutdown earlier today. The Depew, NY "Operations Center will be open through February 2009," as one AE wrote their brokers. Calls to the Customer Relations number are being answered with a recording that states, "We are unable to take your call at this time." We are working to determine how many employees in all will be affected.

HSBC Defaults Rising

UK parent HSBC Holdings plc was "one of the first big banks hit by what became a global tidal wave of subprime-mortgage woes," as depicted in one Wall Street Journal article:

"HSBC's problems trace back to its purchase of Household, which was renamed HSBC Finance. HSBC bought subprime loans in an effort to boost profits in 2005, a time now seen as one when lenders were reducing underwriting standards.

In February 2007, HSBC said its portfolio of subprime mortgages was souring more sharply than expected and increased its bad-debt costs. That warning kicked off months of banks reporting losses tied to subprime loans and related securities."

Despite efforts to work with homeowners and modify terms on "238,000 home loans with a combined outstanding balance of $28.8 billion," defaults have continued to trouble the UK-based bank, rising to 21 percent as of September 30, 2008.

More information continues to flow in, so check back for updates. You can read more on our Discussion Forums or post your comments below.


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Comments:

cooper at 11:40 2008-11-19 said:
Good Ridance. Since they purchsed HFC and Bene they have proceeded to hammer the american consumer in every way possible from high interest real estate loans to credit cards and car loans. Another predator slipping away into the night. Permalink
Dinochick at 21:49 2008-11-19 said:
And let us not forget the infamous loans these type of companies are for, high interest hard money personal/unsecured equity loans.. Permalink
AE Jack at 16:12 2008-11-26 said:
HSBC was a train wreck looking for a place to crash; they were in trouble over a year ago, and their Sub Prime unit, Solstice, was doing junk loans until just a few months ago! I worked for them (AE) for a few months and their submission system was the most cumbersome system I had ever seen. Their "A" paper pricing was lackluster and the Pres. of Mortgage Banking told me, "Well, sadly, we aren't here to make AE's money!". Well, dude, maybe I will see you in the unemployment line! Jack Martin Permalink
RTC at 22:35 2008-12-04 said:
It doesn't sound like any of the posters actually did business with HSBC Mortgage Corp or are familiar with who they were. HSBC Mortgage Corp was a company acquired by HSBC just like HFC (household) was. They were completely separate companies, under different legal entities, and different chains of command.

HSBC Mortgage Corp (I'll leave the HFC talk to a more appropriate thread) was out of NY and ONLY did A paper. They were plain Jane strictly vanilla. They were actually really strict and had an overwhelming focus on compliance. They also had ridiculously long term times that made them difficult to work with.

Frankly, with HSBC (the corporate behemoth) being so conservative I'm amazed they kept wholesale open for so long. But, this is yet another blow for brokers as another mega bank pulls out of wholesale to focus on retail. Permalink

Allie at 11:58 2010-05-30 said:
HSBC cut jobs & denied modifications, but in 2009, the CEO earned $2.6 million.... & Company profits increased to $5.8 BILLION! Explain THAT! Permalink

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Important: This company is on our list of lending operations that have "imploded". However, please note that "imploded" is a somewhat subjective and does not necessarily mean operations are ceased permanently: it can mean bankruptcy filing, temporary but open-ended halting of major operations, or "firesale" acquisition. All information here is provisional, and may contain inaccuracies (especially newer information). If you are planning on doing business with this company or any other one listed on this site, you should inquire with them directly on whether they can still meet your needs. Many are still operating in some capacity.