HomeStreet Bank has announced that it has reached agreements to sell the bulk of its mortgage business to Homebridge Financial Services, PennyMac and New Residential Mortgage.
HomeStreet announced in February that it was seeking to almost completely exit the mortgage business.
“The board of directors made the difficult decision to explore the potential sale of our mortgage banking business after extensive deliberations, ultimately concluding that this potential change would be in the best long-term interest of the company and its shareholders, HomeStreet Chairman, President and CEO Mark K. Mason said at the time.
HomeStreet announced on Friday that it had entered into an agreement for Homebridge Financial Services to acquire the assets of up to 50 HomeStreet mortgage offices. Homebridge will also offer jobs to the HomeStreet employees affected by the sale. The transaction is expected to be “substantially completed” in the second quarter, HomeStreet said.
The bank also said that it has sold “a significant portion” of its mortgage servicing rights – representing unpaid principal balances of about $9.9 billion – to New Residential Mortgage. It has also sold servicing rights related to mortgages pooled in Ginnie Mae securities to PennyMac Loan Services. Together, the sales represent about 71% of HomeStreet’s total servicing portfolio. The transfer of servicing rights is expected to be completed by August.
“The sale of the home loan center-based mortgage origination business and related servicing rights will significantly reduce the size and scope of HomeStreet’s single-family mortgage operation,” Mason said. “These transactions align with our long-term strategic goal of reducing our reliance on this cyclical and volatile earnings stream and increasing our reliance on the more stable earnings from our commercial and consumer banking business.”