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November 20, 2008
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.
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.
BY: Mortgage lender Implode-a Meter: Wall Street Journal
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Filed Under: In The News, Mortgage Professionals.
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