KeyCorp has split Parsippany-based Champion Mortgage in two, selling $2.5 billion in outstanding loans to a subsidiary of HSBC Finance Corp., and agreeing to sell the loan origination part of the business to an investment group.

Champion, a sub-prime lender, employs about 600 people, and a majority of them work in Parsippany fielding loan queries, processing applications and handling customer service calls, according to Jill Arslanian, a KeyCorp spokeswoman.

It is unclear exactly what the impact will be on employees. KeyCorp said in a statement it would pay an unspecified amount in severance pay.

Arslanian said the company buying the loan origination business, Fortress Investment Group of New York, is expected to hire "a significant number" of Champion's personnel, and these could include people who provide the servicing for existing loans that have been sold to HSBC.

Fortress would not comment Friday, and it was unclear if the 25-year old Champion Mortgage brand would survive.

Fortress is a manager of private equity, hedge funds and other investments, and it employs former U.S. senator and vice presidential candidate John Edwards as a senior adviser.

HSBC spokeswoman Kate Durham said HSBC -- which owns the HFC and Beneficial mortgage businesses -- is acquiring only the loan contracts and the customer relationships, not Champion staff. But she said HSBC will take over the responsibility of collecting the payments and responding to customer questions and concerns.

Champion, which makes mortgage and home equity loans in 26 states, contributed $20 million to KeyCorp's earnings through September, on $89 million in revenue. However, sub-prime loan delinquencies have been on the rise throughout the industry, and Ohio-based KeyCorp, which has a large network of banks, primarily in the Midwest, said it wants to focus more exclusively on community banking.

KeyCorp, which first announced its intentions to sell Champion in August, said deal-related charges include $164 million due to a write-off of goodwill related to the 1997 acquisition of Champion. Charges also will include $25 million to $30 million in 2007 on the Fortress deal, for severance pay, lease obligations and fixed asset write-offs.

The sale of the loan portfolio closed Wednesday, though the accounts have yet to be transferred to HSBC and work continues as usual in Parsippany for now, Arslanian said.

The sale of the origination business is expected to be completed early next year.

Champion was founded in 1981 by Joseph P. Goryeb, who is remembered as the one who used to say, "When your bank says no, Champion says, 'Yes.' " on the company's 1990s TV ads.

In Northern New Jersey, KeyCorp also has small corporate real estate, equipment leasing and investment banking offices.