The Guardian reported on Sunday, one day before HSBC is due to release half-year results , that HSBC’s unsecured portfolio is experiencing bad debt. Analysts imply that subprime mortgage blues have spread to other parts of HSBC. Antony Broadbent, banking analyst at Sanford Bernstein, expects the bank to warn that there has been an increase in bad debts in its unsecured lending book.

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It is Saturday night in the United States but Sunday in England and Sunday papers have been printed. It’s also one day closer in London until the day HSBC releases new numbers. London is bracing itself for more bad news on bad debts from HSBC when it announces its half-year results tomorrow, amid fears that the crisis in sub-prime lending in the US has spread to other parts of its loan portfolio.

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As first mortgages reset to higher rates people are losing their homes. Clearly there is a crisis in the mortgage industry. Remember the second mortgage? Finance companies like HSBC Finance, Beneficial, and HFC like to give customers second mortgages. One article explains the truth about these mortgages, and sometimes it is not a pretty picture. The loans are at a higher rate because of the risk, and that risk is called a subordinated position. A first mortgage always takes precedence. If a borrower walks away from a mortgage or is foreclosed upon, and once everthing is liquidated, there is often no money left for the second mortgage holder. The paper is worthless.

We’re hearing rumors about HSBC’s Decision One. Some say Decision One Mortgage, HSBC’s U.S.-based subprime lending arm, is taking even more steps to stop the bleeding in its mortgage operations. Sources suggested to Housing Wire today that the company has decided to close 13 of its 15 offices nationwide, leaving only its Phoenix and Charlotte, N.C. offices behind. Others say talks include selling HSBC’s HFC and Beneficial brand names, or perhaps the entire consumer loan division known as HSBC Finance. Calls to company officials and spokespersons went unreturned.

HSBC said on Friday, July 27, it had sold its 19 percent stake in iBusinessCorporation.com Holdings Ltd to Cheung Kong (Holdings) Ltd for HK$6.98 million ($895,000). iBC.com is a joint venture company established by four parties in early 2000 to facilite e-commerce on the Internet.

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