Bank Owned Repossessed Homes in HSBC Books Dropping

The number of bank owned repossessed homes in HSBC books has been dropping, according to regulatory papers filed in the U.S. by the consumer lending unit of the London-based bank.

In the July-September quarter this year, the number of foreclosed properties in the books of the U.S. unit of HSBC dropped to 6,266 units, down by 12 percent from the 7,105 units it had in the April-June quarter. New foreclosures also dropped, falling to 3,448 in the July-September quarter from the previous quarter’s count of 3,463.

The more than 6,000 foreclosed homes in HSBC books in the July-September quarter are still relatively high, but they represent a substantial decrease of 43 percent from the 10,887 repossessed units during the same period in 2008, which included 5,416 new foreclosures.

The third quarter report also showed that HSBC sold its foreclosure properties faster compared to past quarters, selling them in 184 days on average. In the first quarter, repossessed properties sold in 201 days on average.

According to Nomura banking analyst Robert Law, the faster movement of repossessed homes helps banks convert their problem collaterals into cash.

During the quarter, HSBC lost an average of 8.4 percent from the sale of bank owned repossessed homes, down from its average of almost 13 percent in the April-June quarter and from the nearly 17 percent of loss in the first quarter. According to HSBC, home prices stabilized in the July-September quarter, enabling the bank to sell its foreclosures at higher price levels.

HSBC said that one of the reasons its number of repossessed properties has not increased was its effort to comply with federal mandates to modify loans and prevent foreclosures. So far this year, HSBC has completed modification for 95,000 troubled mortgage accounts, an increase from the 92,500 mortgages it modified last year.

Based on records, HSBC entered the subprime market in the country when it acquired mortgage lender Household International in 2003 and then quickly accumulated a lot of risky home loans. So far, HSBC has posted $67 billion in charges due to its bad home loans in the country. Early this year, the bank announced its plan to exit the consumer lending market, except the credit card market, but reiterated its commitment to continue servicing its existing home loans.

HSBC expects more bank owned repossessed homes in its inventory in the coming months but expects improvements in the other portions of its consumer lending operations.

Related Posts:

• Bank Repo Houses Indicate Credit Card Delinquency Levels
• Bank Owned Foreclosure Lists in Missouri Trimmed by Citi
• Foreclosed Home Listings in Sacramento Grew in 3rd Quarter
• Foreclosures for Sale at Reduced Prices in Northern Colorado
• Bank of America CEO Talks about Bank Repo Homes