In a deal that will likely make changing the outside signage a little easier, HomeStreet Bank inked a deal to sell part of its retail mortgage business to Homebridge Financial Services.
Earlier this month, HomeStreet, a community bank and mortgage lender that operates bank branches and standalone home loan centers, announced that it planned to sell off much of its entire retail mortgage operation, which includes 72 home loan centers in five states, and as nearly all of the mortgage servicing rights associated with loans originated in those retail outlets.
And now, HomeStreet has found a buyer, one that shares a piece of its name: Homebridge.
According to the companies, HomeStreet and Homebridge has entered into a “non-binding letter of intent” that would see Homebridge “potentially acquire the assets related to HomeStreet’s stand-alone home loan centers and to hire HomeStreet’s related mortgage personnel.”
According to HomeStreet’s website, the company has 72 home loan centers: 37 in Washington, 16 in California, six in Hawaii, five in Idaho, and eight in Oregon.
According to HomeStreet, it received interest from several parties, but chose to enter into the non-binding agreement with Homebridge. The companies say that they expect to enter into a “definitive agreement for a transfer of these assets and related personnel to Homebridge.”
According to HomeStreet, the move came about because of “persistent challenges facing the mortgage banking industry.” The bank cited “the increasing interest rate environment,” which has reduced the demand for refinances, and higher home prices that have decreased the affordability of homes as factors dragging down its mortgage origination business.
So, the bank said that it was moving away from mortgages, although not entirely. The bank said that it planned to continue originating mortgages sourced through its bank branches, online banking services, and affinity relationships.
But now, the bank has found its buyer in Homebridge.
“We are excited to be working with Homebridge as the potential home for our high performing network of home loan centers and personnel,” said Mark Mason, chairman, president, and chief executive officer of HomeStreet. “Our network of office locations and origination personnel complement the existing Homebridge business well. We hope to conclude our negotiations and announce a transaction in the first quarter, and to begin the process of moving our home loan centers, fulfillment facilities and mortgage personnel to their new home.”
The deal is subject to a number of conditions, including Homebridge conducting due diligence on the deal and being satisfied with the results of that review.
“Homebridge is one of the largest privately held, non-bank lenders in the United States, and in my opinion shares our culture and values, fulfilling our goal of identifying a company that could provide a dynamic platform for our team’s continued success,” said Rose Marie David, senior executive vice president of mortgage lending for HomeStreet. “With 2,500 associates throughout its 200 retail branches and two wholesale divisions, our leadership team is excited about the alignment and the potential we can realize in coming together.”
Financial terms of the deal were not disclosed.
[Update: This article and headline are updated to reflect the nature of the sale.]