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HomeStreet Lays Off Dozens of Mortgage Employees

Quarterly home lending tumbled at HomeStreet Inc. Mortgage losses piled up, hurting company-wide profits. Dozens of mortgage jobs were eliminated during the most-recent quarter.

The first-three months of 2018 brought income before income taxes of $8 million, according to the Seattle-based bank-holding company’s first-quarter 2018 earnings report.

Results deteriorated from the same three-month period last year, when income was $13 million. An even bigger decline was made versus the $17 million earned in the final-three months of last year.

Mortgage banking losses widened to $6 million from less than $1 million in the first-quarter 2017. Mortgage losses were also worse than $3 million
in the preceding quarter.

Servicing income was reported at $7 million, diminishing from $8.3 million in the report from a year ago and $8.4 million
in the last report.

“Mortgage banking segment results were adversely impacted by reduced gain-on-sale margins, lower origination volumes and lower servicing income,” the bank explained.

Home-lending volume sank to $1.452 billion from
$1.887 billion in the final-three months of 2017 and $1.621 billion in the first-three months of last year.

Mortgage originations
continue to be adversely impacted by higher interest rates — driving down refinance production. In addition, limited supply of existing homes for sale in the Seattle area has held back purchase-money lending.

Production in the current quarter has shaped up to be similar to first-quarter activity based on interest-rate lock commitments, which crept up to $1.6 billion in the first quarter from $1.5 billion the prior period.

HomeStreet serviced $23.220 billion in single family loans for others, growing the servicing portfolio from $22.631 billion at the end of the fourth-quarter 2017 and $20.303 billion as of the close of the first-quarter 2017.
The ratio of mortgage-servicing rights’ carrying value to related loans was 1.27 percent, and the weighted-average servicing fee was 0.28 percent.

The balance sheet contained $1.915 billion in residential assets — including $1.444 billion in single-family loans and $0.470 billion in “home-equity and other” assets. Residential investments grew from $1.835 billion three months earlier and $1.481 billion one year earlier.

HomeSreet serviced $1.324 billion in multifamily loans, more than $1.311 billion at the conclusion of 2017 and $1.140 billion as of the same date in 2017.

The commercial real estate loan investment portfolio finished the first quarter of this year at $2.579 billion — including $0.394 billion in owner-occupied commercial mortgages, $0.634 billion in non-owner-occupied mortgages, $0.812 billion in multifamily assets and $0.739 billion in construction loans. Total CRE investments expanded from $2.430 billion as of Dec. 31, 2017, and $2.282 billion as of March 31, 2017.

HomeStreet reduced its mortgage staffing.

“In response to the ongoing challenges in our mortgage banking segment and reduced expectations for growth, in April we took steps to improve our cost structure and efficiency,” the report stated. “These steps include reductions in headcount and other non-personnel costs in the commercial and consumer banking and the mortgage banking business units as well as corporate support functions.”

HomeStreet said the actions resulted in reduced headcount of 86 full-time employees — including 37 in mortgage banking.

Mortgage staffing fell to 1,307 as of March 31, 2018, from 1,351 three months previous and has been cut from 1,558 a year previous.

At the end of last month, there were 2,384 people on the bank-holding company’s overall payroll. Staffing was reduced from 2,419 at the end of last year and 2,581 at the same point last year.

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