Subprime mortgage lender HSBC Finance Corp. is revising its loan loss provisions for 2006 by 20 percent to $10.6 billion as second-lien loans go bad at a faster rate than anticipated, the company said.

“We have taken account of the most recent trends in delinquency and loss severity and projected the probable effects of re-setting interest rates on adjustable-rate mortgages, in particular in respect of second-lien mortgages,” parent company HSBC Holdings said in a Securities and Exchange Commission filing. “It is clear that the level of loan impairment provisions to be accounted for as at the end of 2006 in respect of mortgage services operations will be higher than is reflected in current market estimates.”

The higher delinquencies reflect the impact of slowing home-price appreciation, particularly in more recent loans, the company said, and slower prepayment speeds are evidence that the trend will continue as adjustable-rate mortgages reset over the next few years.

In the wake of the unexpected disclosure of greater-than-expected loan losses, Illinois-based HSBC Finance is getting a new chief financial officer and a new chief operating officer, Bloomberg reported.

U.S. Group Executive Brendan McDonagh has been appointed chief operating officer at HSBC Finance, and the company plans to name a successor for retiring Chief Financial Officer Simon Pennie.

California-based New Century Financial Corp. this week said it would revise previous estimates of the cost of repurchasing bad loans in 2006. The subprime lender said it would restate earnings for the first three quarters of 2006 and expects to report losses for the fourth quarter when a delayed earnings report is released.

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