The subprime mortgage crisis that has been hitting the nation claimed its newest victim.
The HSBC Finance Corp, based in Prospect Heights, will close it’s subprime mortgage division. Decision One Mortgage was a subprime lender that worked through brokers to give loans to customers that did not qualify under more stringent guidelines.
Many of these loans have resulted in default, due to rising mortgage costs, poor debt repayment, and fraud.
The decision by HSBC to close its subprime operations comes on the heels of several major closings nationwide.
Banks and lenders are moving away from the subprime market and focusing on traditional lending practices with tougher guidelines.
Foreclosures around the Chicago area are up. According to RealtyTrac, Inc, the number of foreclosures rose 12.5 percent during August.
The region has not seen as many foreclosures as other parts of the country such as Las Vegas, where speculative buyers are now sitting on empty homes and condominiums around the valley.
Although the HSBC decision does not affect any employees in the Chicago region, several major lenders have already ceased operations in the area.
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