HSBC Holdings PLC on Friday said it was closing a Fort Mill-based unit that made subprime mortgage loans through independent brokers, eliminating 369 jobs in the Charlotte area.
The London-based financial services giant said it will lay off a total of 750 Decision One Mortgage employees, including 250 in Fort Mill and 119 in Charlotte. The rest of the cuts are in Phoenix.
The subprime mortgage business -- lending to borrowers with sketchy credit -- has been collapsing since late last year as defaults have spiked and investors have declined to buy these mortgages as securities. Lending through independent brokers in particular has suffered from lax underwriting standards.
"It's no longer sustainable and not the right place to allocate capital in the future," said Michael Geoghegan, HSBC's group chief executive, in a statement. "We said we would make tough decisions, and we have done exactly that."
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HSBC Finance, Decision One's Illinois-based parent, now will focus on originating and servicing loans through its consumer lending branches under the HFC and Beneficial names, the company said.
The Observer reported in April that HSBC operations in Fort Mill were being hit by the downturn in the mortgage industry as Decision One closed branches around the country. Fort Mill-based HSBC Mortgage Services, which administers subprime loans purchased from third parties, also had cut jobs after it stopped buying new mortgages.
Just last summer, HSBC moved the headquarters for Decision One and HSBC Mortgage Services from Charlotte to a new building in Lancaster County, just south of Charlotte's Ballantyne area, amid plans for expansion. In April, the company said it had 550 employees in Fort Mill, plus a Decision One branch in Charlotte.
HSBC Mortgage Services remains in operation, spokeswoman Kate Durham said on Friday, but the future of the Fort Mill location wasn't clear. "We will be reviewing options for use of the (Fort Mill) building," HSBC spokeswoman Kate Durham said. "It's too early to say."
Employees who lose their jobs will receive information about severance, outplacement services and open positions at HSBC. They are being given at least 30 days' notice.
Former First Union banker J.C. Faulkner founded Decision One in 1996. In 1999, the company was bought by Household International, which was acquired by London's HSBC in 2003.
Gary Esposito has overseen Decision One and HSBC Mortgage Services since 2005. Durham said she could not comment on the status of individual employees.
HSBC Finance will continue to provide servicing and other support functions as the company winds down Decision One's $349 million in mortgage volumes, the company said.
HSBC -- which stands for Hong Kong and Shanghai Banking Corp. -- said it will record $945 million in charges in the second half of this year as a result of the restructuring.