HSBC FINANCE, Chicago-Based Mortgage Lender, Offers Loan Restructuring, Modification to Stave Off Possible Foreclosures!
METTAWA IL BASED HSBC HAS MODIFIED OR RESTRUCTURED 22% OF ITS MORTGAGE LOANS SINCE 2006!
Since early 2007, many sub-prime mortgage lenders - those who wrote the bulk of their mortgage business to those with lower credit scores, undocumented income, and low down payments, have shut their doors. General Electric's WMC Mortgage has folded, as did Merrill Lynch's First Franklin mortgage origination business.
Lending giant Countrywide Financial is in the process of being acquired by Bank of America - avoiding potential collapse.
Today, only HSBC Finance, a subsidiary of London UK-based HSBC Holdings PLC, remains from the former list of sub-prime kingpins. Although the company announced in mid-May its global profits exceeded those of the First Quarter, 2007, its earnings were offset considerably by a near $3.2 Billion write-down in its U.S Mortgage Operation.
To get out from under its massive consumer credit and mortgage losses, HSBC Finance is making major changes to its lending model for its credit card, auto loan, and sub-prime mortgage businesses. Consmer credit cards and auto loan requirements have been strengthened, with less money available to those with lower FICO Credit Scores. Account limits have been reduced, and inactive accounts have been closed.
HSBC has also tightened its mortgage loan requirements, tightening credit requirements, eliminating no-documentation, "stated income" loans, and reducing the required debt-to-income ratio.
It has also temporarily modified, or, in some cases, permanently restructured, the loan terms for nearly 12,000 of its clients facing possible distress, or eventual foreclosure. totaling $1.9 Billion in Aggregate Loan Value. It's "Home Preservation Program" is aimed at borrowers facing Adjustable Rate (ARM) Loan Resets, as well as other homeowners facing loan delinquency.
The lender closed 2007 with 9,627 foreclosed properties on its books, with estimated losses on foreclosed properties as much as 14% of the homes' previous value.
Each loan modification or permanent restructuring involves full loan underwriting, reviewing the borrower's up-to-date financial credentials. Those not likely to repay under the modified or resturctured terms are often denied new loan terms.
HSBC Executives help their initiatives will prevent many borderline borrowers from falling into foreclosure.
See Becky Yerak's story in yesterday's Chicago Tribune for more info.
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