HSBC Mortgage to lay off 225
Ending relationships with mortgage brokers
About 225 local employees at HSBC Mortgage Corp. are losing their jobs, as the lender shuts down wholesale and correspondent lending and shifts to direct lending to consumers instead of through brokers.
The job cuts represent 20 percent of the 1,100 workers at the Depewbased division of HSBC Bank USA. In addition, about 100 account executives scattered nationwide, who work as representatives between HSBC and brokers, are getting cut.
Employees were notified Tuesday of the layoffs, although they will stay on for 60 days, said spokeswoman Kate Durham.
But the bank will stop originations through the two “channels” effective immediately, citing “unprecedented market conditions,” according to a memo sent to all brokers and obtained by The Buffalo News.
The lender will continue to process any loans “registered” as of Tuesday, but loans must be locked by Dec. 2 and funded by Jan. 20, 2009, the memo said.
Consistent with its new national strategy, HSBC will now make mortgage loans directly to consumers through its 460 bank branches, most of which are in New York state.
“HSBC Mortgage Corp. (USA) truly appreciates the business and support of our brokers over the years,” it said in the memo.
The loss of HSBC as an option is the latest blow for local mortgage brokers and customers. Many of the major mortgage lenders that brokers dealt with nationwide have either gone out of business, been acquired or pulled back. Citigroup’s CitiMortgage cut its broker ranks nationally from 9,500 to 1,000.
But HSBC meant more to local brokers than most other lenders. Mortgage bankers and brokers said the bank was reliable, responsive, and consistent, was easily accessible, and had great rates and products that met customers needs, even for small loans other lenders wouldn’t touch.
“It was a known commodity. And pricing was always good,” said Michael J. Meyer, senior loan officer at Alexis Funding, who said he was “reeling” from the news. “Are we going to miss it? Oh, yeah. This is a big one.”
HSBC was a major part of local brokers’ arsenal — as much as 60 percent for Alexis. And brokers say HSBC had made some moves of late to be more competitive again, so the decision comes as a surprise.
“Given some of the moves they had made recently, it is completely counterintuitive. It was a surprise,” said Brooke Anderson-Tompkins, CEO of
1st Priority Mortgage, a subsidiary of RealtyUSA. “We’re disappointed to see a good investor removed from our marketplace.”
“I really thought that they had more of a dedication to wholesale than many of the other lenders,” said Nancy Gascoyne, a loan officer at Multi- Source Funding in Cheektowaga.
Most importantly, they said, HSBC is local, which made customers more comfortable.
“It’s a loss of an old, old friend. It really is devastating,” said Ronald Michnik, president of Independent Funding in Orchard Park, which used HSBC for as much as 30 percent of its business. “What HSBC did is add credibility to our reputation, so we could say we’re dealing with a major player.”
And now the loss is sending brokers scrambling to find alternatives to take up the slack.
“It is a blow for us, because we were very close to them. They were just a little bit easier to deal with,” Gascoyne said. “They will be missed, but life goes on, and we have plenty of other lenders.”
Durham would not say how many brokers HSBC Mortgage works with. But at one time, it had 340 retail loan officers in 39 branches in seven states, plus nearly 100 account representatives handling 5,000 wholesale and correspondent broker accounts in 48 states.
She also would not disclose total loan originations, but said the wholesale and correspondent business represented a small percentage of that in recent months, as market conditions and changes in underwriting criteria sapped volume.
The decision comes as HSBC Mortgage Corp. is integrated more closely with the Consumer and Mortgage Lending division of HSBC Finance, the consumer lender formerly known as Household International.
London-based HSBC Holdings Plc bought Household in 2003 for $15.5 billion, counting on its fast-growing mortgage, credit card, and other businesses to propel its growth in the United States, while tapping its customer marketing expertise.
But the U. S. mortgage crisis upended those plans, as HSBC instead has suffered billions of dollars in loan losses, forcing it to replace management, revamp operations, tighten underwriting and retrench.
HSBC Finance already has largely abandoned wholesale and correspondent lending through brokers, where much of its problems originated because of lax controls. It closed 460 offices to bring its consumer finance branch network down to 900, shuttered service centers, and cut more than 9,000 jobs. And it’s running off the remaining bad loans.
Even so, it continues to bleed, reserving another $4.3 billion for losses in the third quarter.
Affected workers will get benefits, severance pay, the opportunity to post for other HSBC jobs, and outplacement assistance.
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