Mortgage Unit

HSBC Holdings, Europe's biggest bank, said Friday that it would close Decision One Mortgage, a U.S. unit that made sub-prime loans through independent brokers, cutting 750 jobs and taking $945 million in charges and write-downs. HSBC had sold the brokered sub-prime loans in the secondary markets but was no longer able to do so because investor demand has evaporated, said Thomas Detelich, group executive for HSBC North America Holdings Inc.

Bank of America Corp. is feeling billions of dollars in fresh pain from its 2008 acquisition of home-loan specialist Countrywide Financial. Implicitly acknowledging that it overpaid significantly when it bought the Calabasas lender for $4.2 billion in stock, Bank of America said Monday that it was slicing $2 billion off the value of that investment on its books. The Charlotte, N.C., bank also disclosed that it agreed to pay Fannie Mae and Freddie Mac a total of $2.8 billion to settle claims of misrepresentations on billions of dollars in loans that went sour after Fannie and Freddie bought them from Countrywide, which was once the No. 1 home lender.

Eldorado Bancshares Inc., the Laguna Hills-based bank holding company, said it has agreed to transfer its wholesale mortgage unit, Commerce Security Mortgage, to American Sterling Bank, which has offices in Irvine. Terms were not disclosed. The bank had said earlier this month that it would either sell or close the Sacramento unit, which employs about 100. Eldorado officials blamed rising interest rates, which have caused the mortgage business to drop.

Settling the biggest reported case of data theft by a financial insider, Bank of America Corp. will provide free credit monitoring, identity theft insurance and reimbursement for losses to as many as 17 million consumers who dealt with its Countrywide Financial mortgage unit. The agreement was approved Monday by a federal judge in Kentucky. Bank of America, which acquired Countrywide in 2008, denied all allegations of wrongdoing, saying it had settled only to "avoid the additional expense and uncertainty of further litigation.

BankAmerica Corp. is one of a handful of companies negotiating to purchase Shearson Lehman Mortgage, one of the nation's largest mortgage bankers and loan servicers, a source close to the negotiations said Monday. The San Francisco holding company for Bank of America would triple its loan service operations by acquiring the Irvine-based mortgage banker from its parent firm, Shearson Lehman Bros., a New York brokerage and investment banker.

General Motors Corp. is in "advanced" talks with a group of investors to sell a stake in its commercial mortgage unit to raise cash for the business, a spokeswoman said. The New York Post, citing unidentified people familiar with the situation, reported that Kohlberg Kravis Roberts & Co. was negotiating to buy a majority stake in the unit for at least $1 billion. Spokeswoman Toni Simonetti declined to comment. GM shares rose 24 cents to $28.61 on the New York Stock Exchange.

H&R Block Inc. says it is looking to sell its Irvine-based wholesale mortgage unit, Option One, in an effort to focus on its retail businesses. Option One, founded in 1992, specializes in mortgages to customers with bad credit, originating about $3.6 billion in loans in the last year. That makes the company--which employs 1,500 people nationwide--slightly larger than Orange-based rival Long Beach Financial Corp.

Orange County residents have filed lawsuits accusing General Motors Acceptance Corp. and Glendale Federal Bank of consistently failing to record critical documents showing that borrowers have paid off their home mortgages. The suits, filed Monday in Orange County Superior Court, say the lenders for years have violated state law requiring the recording of mortgage reconveyances--public notices that a mortgage loan has been paid off and that the lender no longer has a claim on the property.

American International Group Inc. reported a 34% jump in second-quarter profit Wednesday despite a $78-million operating loss in its mortgage insurance unit caused by weakness in the U.S. housing market. The New York-based company, the world's largest insurer, sought to calm investors' nerves about its exposure to the home mortgage market, but some analysts remained concerned. "We continue to be very comfortable with our exposure to the U.S.

H&R Block Inc. said Tuesday that a deal to sell its troubled mortgage lending arm had fallen through, forcing it to scrap most of the $1-billion business. The Kansas City-based tax preparer and Cerberus Capital Management said they had terminated their agreement, announced in April, for a Cerberus subsidiary to buy Option One Mortgage Corp.

Despite sub-5% mortgage rates and signs that home prices have bottomed out in some places, executives and economists are decidedly downbeat about the future of the country's mortgage industry as well as the housing market it depends on. The Mortgage Bankers Assn. said Tuesday that it expected home foreclosures in the U.S. to continue to rise before leveling off late next year. The reason: Job losses have replaced adjustable subprime loans as the main cause of defaults. Jay Brinkmann, the group's chief economist, predicted that unemployment would rise through next summer, causing delinquencies to rise.

Mark Ernst, who left the top job at tax preparer H&R Block Inc. after the company suffered more than $1 billion in losses tied to subprime lending by its mortgage unit, was named a deputy commissioner at the Internal Revenue Service. Ernst, 50, will oversee operations support, an IRS statement said.

GMAC, the ailing financing arm of General Motors Corp., posted its fifth straight loss and said its mortgage unit might not survive. The third-quarter net loss widened to a record $2.52 billion from $1.6 billion a year earlier, the Detroit company said. Revenue declined 43% to $1.72 billion. The Residential Capital home-loan unit lost $1.9 billion during the quarter, and GMAC's auto finance business lost $294 million. GMAC was crushed by slumps in the housing market, where foreclosures are running at record levels, and in auto sales, which GM labeled the worst since 1945 when it reported October results this week.

Massachusetts authorities sued H&R Block Inc. on Tuesday, alleging that its mortgage unit discriminated against black and Latino borrowers and escalated a foreclosure crisis in the state. The lawsuit is the first by a state in the current crisis to accuse a sub-prime-mortgage lender of civil rights violations. The complaint, filed in Suffolk Superior Court, accuses H&R's Option One Mortgage Corp. of engaging "in unfair and deceptive conduct on a broad scale."

Washington Mutual Inc., the largest savings and loan, on Thursday reported its first quarterly loss since 1997 after writing down the value of its home mortgage unit and setting aside $1.5 billion to cover bad loans. The loss in the fourth quarter was $1.87 billion, or $2.19 a share, compared with a profit of $1.06 billion, or $1.10, a year earlier, the Seattle-based company said. It was expected to post a loss of $1.43 a share, according to the average estimate of 17 analysts surveyed by Bloomberg.

National City Corp., Ohio's largest bank, will eliminate 900 more jobs and halve its dividend, the first reduction since the payout began in 1935. Its shares fell 5.3% in New York trading. The company plans to raise capital and has hired Goldman Sachs Group Inc. as its advisor, Cleveland-based National City said. It is halting home loans through brokers and firing the employees in that business, bringing total cuts to 3,400, or about 10% of its workforce, in one year. National City is still reeling from the housing slump a year after selling its sub-prime mortgage unit to Merrill Lynch & Co. The bank will pay 21 cents a share Feb. 1 to shareholders of record as of Jan. 14. The dividend was previously 41 cents a share.

Settling the biggest reported case of data theft by a financial insider, Bank of America Corp. will provide free credit monitoring, identity theft insurance and reimbursement for losses to as many as 17 million consumers who dealt with its Countrywide Financial mortgage unit. The agreement was approved Monday by a federal judge in Kentucky. Bank of America, which acquired Countrywide in 2008, denied all allegations of wrongdoing, saying it had settled only to "avoid the additional expense and uncertainty of further litigation.

H&R Block Inc. says it is looking to sell its Irvine-based wholesale mortgage unit, Option One, in an effort to focus on its retail businesses. Founded in 1992, Option One specializes in mortgages to customers with bad credit, originating about $3.6 billion in loans over the last year. That makes the company--which employs 1,500 people nationwide, including 600 in Orange County--slightly larger than Orange-based rival Long Beach Financial Corp.

H&R Block Inc. said Tuesday that a deal to sell its troubled mortgage lending arm had fallen through, forcing it to scrap most of the $1-billion business. The Kansas City-based tax preparer and Cerberus Capital Management said they had terminated their agreement, announced in April, for a Cerberus subsidiary to buy Option One Mortgage Corp.

The head of Capital One Financial Corp.'s mortgage unit, Lance Melber, will leave the company, according to an internal e- mail by Melber. Mike Dobbins, a Capital One senior vice president for retail banking, will succeed him as head of the Overland Park, Kan.-based Capital One Home Loans division Nov. 1, the company said. Melber joined Capital One in 2004, when it acquired ESmartloan, which he ran. Shares of McLean, Va.-based Capital One rose $1.06, or 1.5%, to $71.89.