HomeStreet sells almost $5 billion servicing rights

by Steve Randall05 Jul 2018

HomeStreet Inc., the parent company of HomeStreet Bank, has announced that is has executed a definitive agreement to sell a portion of its single-family mortgage servicing rights.

The transaction provides for the sale of the rights to service approximately $4.9 billion in total unpaid principal balance of single family mortgage loans serviced for both Fannie Mae and Freddie Mac, which represents approximately 20% of HomeStreet’s total single family mortgage loans serviced for others as of March 31, 2018.

The purchaser will also acquire an estimated $27.2 million of related deposit balances.

HomeStreet chairman, president, and CEO Mark K. Mason says the sale is part of its ongoing balance sheet and capital management.

“This sale will provide regulatory capital relief to support the continued growth of our Commercial and Consumer Banking business. Risk management results will also be improved through reduced convexity costs in the remaining mortgage servicing rights portfolio,” he said.

The transaction is expected to complete by August 16, 2018 and HomeStreet will continue to service the loans between the closing date and the final transfer date.

Mason added that the sale does not mean a change in the firm’s strategy.

“Retaining servicing on most of our mortgage loans we originate and sell is an important part of our mortgage banking strategy to which we remain committed. This strategy has historically been a competitive advantage and these assets have generated strong returns on equity through the cycle,” added Mason.

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