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Mortgage Earnings, Lending Worsen at HomeStreet

Mortgage News

Mortgage originations declined at HomeStreet Inc. and are likely to fall further. Although mortgage losses continued, residential servicing and assets expanded.

In its fourth-quarter 2017 earnings report, the Seattle-based financial institution disclosed $17 million in income before income taxes during the final-three months of last year.

Earnings soared from the same-three months in 2016, when income was $3 million. But results waned compared to the previous quarter, when income was $20 million.

The Tax Cuts and Jobs Act resulted in the recognition of a one-time, non-cash tax benefit of $23.3 million for 2017.

Pre-tax mortgage banking income was a $3 million loss, worsening from a less than $1 million loss in the third quarter. But losses were slashed from a $14 million in the fourth-quarter 2016.

At $1.887 billion, single-family loan originations declined from $2.035 billion in the preceding three months and $2.515 billion in the year-earlier quarter. Annual volume fell to $7.554 billion in 2017 from $8.997 billion in 2016.

HomeStreet said new business slowed as a result of a decreased supply of homes for sale in many of its markets. The quarter-over-quarter drop was additionally impacted by seasonal factors, while the year-over-year drop reflected slowing refinances.

Single-family loan rate lock commitments fell to $1.5 billion in the fourth quarter from $1.9 billion the prior period. The drop is an indication that first-quarter 2018 volume will likely fall further.

The bank-holding company reported a third-party mortgage servicing portfolio of $22.631 billion, including $22.124 billion in agency loans and $0.507 billion in other loans. The portfolio grew from $21.892 billion as of Sept. 30 and $19.488 billion as of Dec. 31, 2016.
The ratio of mortgage servicing rights carrying value to loans serviced was 1.14 percent, while the weighted-average servicing fee was 0.28 percent.

Residential assets ended 2017 at $1.835 billion, including $1.381 billion in mortgages and $0.453 billion in
home-equity and other consumer assets. Residential holdings were $1.706 billion three months prior and $1.444 billion one year prior.

Multifamily loan originations rose to $0.115 billion from $0.110 billion in the previous three-month period and $0.095 billion in the same three months during 2016. Full-year multifamily originations inched up to $0.341 billion from $0.326 billion in 2016.

HomeStreet said it serviced $1.311 billion in multifamily loans for third parties. The portfolio increased from $1.213 billion as of Sept. 30 and $1.108 billion
as of year-end 2016.

Commercial real estate assets dipped to $2.038 billion from $2.051 billion but have expanded from $1.899 billion as of the end of the previous year. Last month’s total was comprised of $0.623 billion in non-owner occupied CRE loans, $0.728 billion in multifamily loans and $0.688 billion in construction-and-land-development loans.

Mortgage employees numbered 1,351 at the end of last year, 41 fewer people than in the last report. Staffing sank from 1,554 at the end of 2016.

Company-wide headcount closed out 2017 at 2,419 full-time equivalent employees, fewer than 2,463 three months earlier and 2,552 one year earlier.

“The decrease in employees compared to the prior year was primarily due to the third-quarter 2017 reduction in our workforce related to our restructuring in our mortgage banking segment,” the report stated.

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