HSBC 2015 Annual Report Download - page 148

Report of the Directors: Risk (continued)
Credit risk
HSBC HOLDINGS PLC
146
Trends in two months and over contractual delinquency in the US
2015 2014
$m $m
In personal lending in the US
First lien residential mortgages 1,954 3,271
–
Consumer and Mortgage Lending 1,049 2,210
–
other mortgage lending 905 1,061
Second lien residential mortgages 161 216
–
Consumer and Mortgage Lending 106 154
–
other mortgage lending 55 62
Credit card 16 17
Personal non-credit card 3 7
Total at 31 December 2,134 3,511
% %
As a percentage of the equivalent loans and receivables balances
First lien residential mortgages 5.7 8.6
Second lien residential mortgages 4.4 5.0
Credit card 2.3 2.4
Personal non-credit card 0.7 1.4
Total at 31 December 5.4 8.1
Gross loan portfolio of HSBC Finance real estate secured balances
Re-aged17
Modified
and re-aged Modified
Total
renegotiated
loans
Total non-
renegotiated
loans
Tota l
gross
loans
Tota l
impairment
allowances
Impairment
allowances/
gross loans
$m $m $m $m $m $m $m %
At 31 December 2015 4,858 5,257 519 10,634 8,612 19,246 986 5.1
At 31 December 2014 6,637 6,581 587 13,805 10,619 24,424 1,679 6.9
For footnote, see page 191.
Number of renegotiated real estate secured accounts remaining in HSBC Finance’s portfolio
Number of renegotiated loans (000s) Total number
of loans
(000s) Re-aged
Modified
and re-aged Modified Total
At 31 December 2015 66 54 6126 240
A
t 31 December 2014 85 64 6 155 297
HSBC Finance loan modifications and re-age
programmes
HSBC Finance maintains loan modification and re-age (‘loan
renegotiation’) programmes in order to manage customer
relationships, improve collection opportunities and, if
possible, avoid foreclosure.
Qualifying criteria
For an account to qualify for renegotiation it must meet
certain criteria, and HSBC Finance retains the right to
decline a renegotiation.
Renegotiated real estate secured loans are not eligible for a
subsequent renegotiation for six or 12 months depending
upon the action, with a maximum of five renegotiations
permitted within a five-year period. Borrowers must be
approved for a modification and, to activate it, must
generally make two minimum qualifying monthly payments
within 60 days. In certain circumstances where the debt
has been restructured in bankruptcy proceedings, fewer or
no payments may be required. Real estate secured loans
involving a bankruptcy and accounts whose borrowers are
subject to a Chapter 13 plan filed with a bankruptcy court
generally may be considered current upon receipt of one
qualifying payment, while accounts whose borrowers have
filed for Chapter 7 bankruptcy protection may be re-aged
upon receipt of a signed reaffirmation agreement. In
addition, any account may be re-aged without receipt of a
payment in certain special circumstances (for example, in
the event of a natural disaster or a hardship programme).
Within the constraints of our Group credit policy, we allow
for multiple renegotiations under certain circumstances.
Consequently, a significant proportion of loans included in
the table above have undergone multiple re-ages or
modifications. In this regard, multiple modifications have
remained consistent at 70% to 75% of total modifications.
The accounts that received second or subsequent
renegotiations during the year do not appear in the
statistics presented. These statistics treat a loan as an
addition to the volume of renegotiated loans on its first
renegotiation only.