Within the past year, dozens of sub-prime lenders - those catering primarily to potential borrowers with lower credit scores, low down payments, and undocumented income - have bitten the dust. First Franklin, WMC, New Century Bank, and on, and on!
Even Countrywide Home Loans had to face acquisition by banking giant Bank of America, to avoid possible financial ruin.
But HSBC is still here - although they have been beaten around a bit!
The London UK-based HSBC Holdings made a profit worldwide in 2007. Here in the U.S. however, HSBC Finance suffered nearly $3.2 Billion in write-downs last year. The domestic HSBC's response - a lot of belt tightening to start.
The HSBC Credit Card and Consumer Auto Loan Divisions are tightening standards for card issuance, credit line increases, and timely payment. Inactive accounts are being closed as well.
On the Mortgage Loan side, HSBC Finance has reduced the permissable debt-to-income ratio on many loans, eliminated most "no-doc" loans, tightened the FICO Credit Score floor and added scrutiny to manual application analysis.
However, HSBC has been quite aggressive at offering short-term Mortgage Loan Modifications, or, in some cases, permanent Loan Restructures to its mortgage clients having trouble keeping up with their mortgage payments, or facing an Adjustable Rate Mortgage (ARM) Reset. Certain borrower standards must be met to qualify for loan modification or restructure - those showing a repeated slow pay habit, or without sufficent current income or strong credit, may not be approved.
HSBC Loan Restructures or Modifications require full underwriting, although computer-based underwriting formulas will be considered.
Nearly 12,000 HSBC borrowers have had their loans restructured or modified, under their "Home Preservation Program," since late 2006, with an Aggregate Loan Value approaching $1.9 Billion.
The lender closed last year with 9,627 foreclosed properties in its portifolio, with estimated foreclosed property losses as much as 14% of the market value of the average foreclosed home.
The lender hopes their initiatives re-working loans will reduce loans going delinquent, and possible foreclosure filings, for many of its clients who qualify.
See our post today @ BlogChicagoHomes.com, with a link to Becky Yerak's story in yesterday's Chicago Tribune, for more information.
DEAN & DEAN'S TEAM CHICAGO
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