HSBC Bank USA, N.A., has disclosed an agreement to outsource all of its mortgage processing and loan servicing.
U.K.-based HSBC Holdings plc got into the U.S. subprime mortgage business with its $14 billion purchase of Household International Inc. in 2003. But that investment ended in disaster, with HSBC shutting down the entire consumer finance operation in 2009 in a move that impacted 5,400 employees.
HSBC, however, kept open its conforming HSBC Mortgage Corp.
Now HSBC is scaling back on that operation.
An arrangement announced Monday calls for PHH Mortgage Corp. to manage mortgage processing for New York-based HSBC. Mortgage services will continue to be available through HSBC branches, and in-house loan originators will continue originating loans for existing HSBC customers.
In addition, PHHÂ will also sub-service HSBC’s prime mortgage holdings and third-party mortgage servicing portfolio. As of March 31, the mortgage portfolio was $15.5 billion and the serviced-for-others portfolio was $36.6 billion.
While the agreement is immediately effective, the transfer of operations is expected to be completed by the first-quarter 2013.
No assets are changing hands, but HSBC will pay fees to PHHÂ for the services. First Niagara customers are not part of the deal.
As a result of the arrangement, 400 HSBC employees will be given the opportunity to transfer to PHH Mortgage — which indicated in a separate statement that it expects the 400 Depew, N.Y., employees to make the transfer.
A news story in the Buffalo News indicated that around 680 employees are employed at the location. While 80 are expected to remain with HSBC, 200 workers are being displaced — though some might be considered for around 104 open positions at PHH.
“This agreement is a continuation of HSBC’s strategy to reposition our U.S. business and ensures we manage our mortgage activities most efficiently,” HSBC USA President and Chief Executive Officer Irene Dorner said in the announcement.
