Commentary: HSBC Subprime Plans, NAR Confusion
HSBC rumors: Numerous rumors have surfaced in the past few weeks that HSBC is considering a full-scale exit from subprime lending. Its Decision One origination arm is the European bank's U.S.-based wholesale subprime lender, and has been the focus of intense scrutiny recently -- even before HSBC announced late this past week it will be exiting the correspondent lending channel at the end of May. No word from HSBC sources on its plans for Decision One, which has also been rumored to be up for sale, but the company did blame its correspondent lenders for the lion's share of more than $10 billion in loan impairment charges during 2006 at a Senate hearing this past week, saying that loans originated by "third parties" but on the company's books drove larger-than-expected losses. All of which, if true, would seem to suggest that correspondent lending could quickly become an endangered species in both subprime and Alt-A markets. A few correspondents that have written to HW have said, however, that their loan guidelines were no different that those used in the wholesale origination channel. By the way, your emails are a vital part of how HW keeps on top of industry rumors. Don't assume we already know about it -- be sure send an email at email@example.com if you've got something to share. Housekeeping and a thank-you: HW's daily email subscriber list has passed the 2,000 mark this week, something I think says volumes about the need the mortgage industry has for freely-available information. Thanks for reading. If you don't yet get the HW Daily Update, be sure to sign up. And, as it turns out, the switch to more of a blog format at HW (announced last week) hasn't changed much about what's being done here -- delivering insightful and free news about the mortgage industry --except for the addition of a commenting feature and a little less perceived pressure on yours truly. I can't help but write as a reporter; it's what I know how to do. Here's hoping you continue to get value out of the independent reporting that drives this site, whether we're in a housing bust or a housing boom. NAR doing its best to confuse the media: I'm no housing bear, but the press releases coming out of the rah-rah folks at the NAR the past few months have been downright confusing. Year-to-year comparisons are what matters in discussing performance in the housing industry -- or any industry, for that matter -- something the trade organization seemed to understand during the recent housing boom. Nary a press statement in 2005 didn't cover the massive gains year-over-year. Now in the middle of a housing slump, and perhaps feeling pressured by NAR chief economist David Lereah's famous call of the bottom of it all a few months back, the realtor-led organization has decided to throw economic analysis into the wind. Its past two statements on existing home sales have focused nearly exclusively on month-to-month comparisons, something that has this reporter baffled. The year-over-year numbers still show declines, but also suggest a narrowing gap between current and year-ago levels -- evidence that the housing bust may be reaching a turn-around point. Is there a reason the NAR has chosen to leave more grounded economic analysis behind in favor of unsound analysis that seems to be blind pandering to its economist's previous press claims? Even more confusing, the NAR said this week that its measure of median sales prices was flawed and shouldn't be relied upon. It said this, of course, because the median price measure showed a decline in February when the organization would have preferred to have reported an upswing. This editor has one question to ask: why wasn't this brought up during the recent housing boom, when the NAR was gladly touting 7 percent annual gains in median prices?