Introduction: HomeStreet Makes a Big Move with $990 Million Loan Sale
In a significant business development, HomeStreet Bank, a subsidiary of HomeStreet, Inc., has announced it will sell a $990 million portfolio of multifamily commercial real estate loans to Bank of America (BofA). This move comes as part of the bank’s strategy to streamline operations and focus on key areas of its business.
The loan sale, expected to be finalized by December 31, will see HomeStreet retain servicing rights, meaning they will continue managing the loans even after the transaction. Let’s break down the details of this deal, its implications, and what it means for investors and the real estate market.
The Deal: HomeStreet Sells $990 Million in Loans to BofA
HomeStreet’s subsidiary, HomeStreet Bank, has agreed to sell a multifamily loan portfolio valued at $990 million to Bank of America. This portfolio consists of commercial real estate loans for multifamily properties, which are often a source of steady income for banks due to the long-term nature of such investments.
The sale is expected to be completed by the end of 2024, specifically before December 31.
Key Details of the Sale
- The loan portfolio will be sold at 92% of the principal balance of the loans.
- The sale price includes the value of the servicing rights, meaning HomeStreet will continue to manage the loans after the sale is completed.
- The sale will help HomeStreet streamline its operations and focus on other parts of its business.
What Does This Mean for HomeStreet Bank?
For HomeStreet, this deal represents a strategic move to simplify its operations and refocus its efforts. By selling off the $990 million loan portfolio, the bank can raise cash and potentially use the funds for other investments or business priorities.
Additionally, by retaining the servicing rights, HomeStreet will continue to earn fees for managing the loans, giving it a consistent revenue stream without holding onto the loans themselves. This arrangement allows the bank to reduce its exposure to real estate risk while maintaining a role in the loan servicing process.
Why Is Bank of America Interested?
For Bank of America, purchasing a $990 million multifamily loan portfolio fits within its strategy of expanding its commercial real estate business. Bank of America is a key player in the real estate finance sector, and this acquisition strengthens its position in the multifamily market, which has been a steady performer in real estate over the years.
Key Benefits for Bank of America:
- Expansion of Real Estate Assets: With the purchase, BofA expands its portfolio of commercial real estate loans, which can generate long-term, stable income.
- Diversification: This move further diversifies BofA’s real estate holdings, especially in a sector known for relatively low risk compared to other types of commercial loans.
- Servicing Rights: By acquiring the servicing rights, Bank of America gains the ability to manage the loans, potentially benefiting from any long-term increases in value.
For Bank of America, this deal also represents an opportunity to increase its loan servicing business, which can be a lucrative area, especially in the commercial real estate space.
What Does This Deal Mean for the Market?
This $990 million sale highlights the ongoing changes in the real estate finance industry, especially as banks and financial institutions look for ways to optimize their portfolios. For HomeStreet, the sale helps reduce its exposure to multifamily real estate while still allowing it to generate income through servicing.
For Bank of America, it strengthens its foothold in a market segment that has remained resilient despite economic fluctuations. Multifamily properties, in particular, have proven to be relatively stable, offering consistent returns.
Impact on Investors:
For investors watching HomeStreet Inc. (HMST), the announcement has already had some impact on the stock price. As of pre-market trading, HomeStreet’s stock was down by 0.27% at $10.95. This slight dip reflects the cautious reaction of investors who are still digesting the implications of the sale.
The sale price of 92% of the principal balance indicates that the portfolio is being sold at a reasonable value, but it also raises questions about the bank’s future performance. Investors will be keen to see how HomeStreet uses the proceeds from the sale and how the loan servicing agreement impacts its long-term revenue.
For Bank of America, the deal could be seen as a positive move to increase its assets in the commercial real estate sector, but investors will also be watching closely to see if it translates into future growth for BofA’s commercial real estate business.
What’s Next for HomeStreet and Bank of America?
The completion of this sale, expected before December 31, will mark a key moment for both HomeStreet and Bank of America. Here’s what could happen next for both parties:
For HomeStreet Bank:
- Post-Sale Focus: HomeStreet will continue managing the loans through the servicing agreement, which will bring in fees, but it will likely shift focus to other areas of business, perhaps looking at new revenue streams or expansion opportunities.
- Potential for Further Sales: If this sale is successful, HomeStreet may consider selling off other parts of its loan portfolio in the future to streamline operations and improve its balance sheet.
For Bank of America:
- Integration and Management: Bank of America will now take on the responsibility of servicing the loans, ensuring the management process is as efficient as possible to maximize returns.
- Portfolio Expansion: BofA is likely to continue looking for similar deals to expand its holdings in the multifamily commercial real estate sector, where demand has been steady.
Conclusion: Strategic Moves by HomeStreet and Bank of America
HomeStreet’s sale of a $990 million multifamily loan portfolio to Bank of America is a significant move in the world of commercial real estate finance. For HomeStreet, it offers an opportunity to simplify operations and focus on other business priorities, while still earning revenue through loan servicing. For Bank of America, it strengthens its position in a key market segment with steady returns.
As this deal moves towards completion by December 31, both banks will likely continue to focus on optimizing their portfolios, and investors will be watching closely to see how it impacts their future performance.

I am Aparna Sahu
Investment Specialist and Financial Writer
With 2 years of experience in the financial sector, Aparna brings a wealth of knowledge and insight to Investor Welcome. As an accomplished author and investment specialist, Aparna has a passion for demystifying complex financial concepts and empowering investors with actionable strategies. She has been featured in relevant publications, if any, and is dedicated to providing clear, evidence-based analysis that helps clients make informed investment decisions. Aparna holds a relevant degree or certification and is committed to staying ahead of market trends to deliver the most up-to-date advice.