HSBC Bank USA Monday morning announced that it has inked a deal to transfer roughly $52 billion of residential servicing rights to PHH Corp., which also will absorb two-thirds of its mortgage work force.

According to a statement issued by HSBC no money will change hands in the transaction.

A spokesman for HSBC told National Mortgage News that the bank will remain in the mortgage business as a lender, originating loans through 250 branches. (HSBC is in the process of selling 195 branches to First Niagara, Buffalo. That deal should close in a few days.)

All new originations from HSBC will be serviced by PHH, which ranks seventh nationwide among residential processors with $182 billion of receivables in its portfolio.

About 400 out of 680 workers affected by the deal will be transferred to PHH, the spokesman said. Another 104 will be allowed to apply for open positions at PHH and 40 will remain at HSBC in an oversight capacity which means lay-offs could total 136.

HSBC’s servicing platform is based in the Buffalo suburb of Depew, N.Y. PHH has promised to maintain a presence in the area, the spokesman said.

“Under the terms of the agreement, PHH Mortgage will provide HSBC with mortgage originations processing services as well as sub-servicing of the bank's prime mortgage loan portfolio and serviced for others portfolio,” HSBC said. “There is no consideration payable or transfer of assets involved but HSBC will pay fees to PHH Mortgage for the services provided in accordance with the agreement.”

A British bank, HSBC has been burned badly by the U.S. mortgage business, mostly because of its investment in Household Finance, a now defunct subprime lender that imploded a few years back, causing billions of dollars in losses.

The Depew operation concentrated on the ‘A’ paper business and has its roots in Marine Midland Bank, a depository that HSBC bought several years earlier.

HSBC has been trying to unload its mortgage operation for two years, but refused to fire sale the business.

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