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Caliber Acquires Banc of California Mortgage Division

Irving, Texas-based lender Caliber Home Loans Inc. has acquired the residential loan division of Banc of California, a full-service bank based in Irvine, for $25 million in cash. For an additional $36 million, Caliber has also purchased the mortgage servicing rights on about $3.8 billion in unpaid balances of conventional mortgages. Banc of California took a $3.5 million loss on the transaction.

The sale includes all home loan assets from the company, including any related to originating, processing, underwriting, funding, and selling residential loans, according to a filing with the U.S. Securities and Exchange Commission.

Caliber may also retain many of the Banc of California’s home loan staff, which amounts to nearly 900 employees. The sale cuts the organization’s workforce almost in half.

“We expect most of these employees will be retained by Caliber,” said Banc of California Spokesman Joe Hixson.

The sale will allow Banc of California to focus more on its commercial banking efforts, according to Hugh Boyle, Interim Chief Executive of Banc of California.

“The sale of the mortgage business will align Banc of California’s business profile with that of a more traditional spread-based lender by significantly reducing the bank’s reliance on mortgage banking gain on sale revenue, lowering the risk of MSR valuation changes impacting earnings, streamlining the bank’s operations, and allowing the bank to redeploy capital to our commercial banking business,” Boyle said.

The sale comes on the back of a similar transaction between New Residential Investment Corp. and CitiMortgage just last month. New Residential agreed to purchase $97 billion in unpaid principal balances of MSRs from CitiMortgage. The sale is part of CitiGroup’s larger initiative to exit the mortgage servicing sector and focus more on retail banking.

“Over the past several years, we have made significant progress transforming our business to deliver a sustainable annuity of growth,” said CitiMortgage President and CEO C.D. Davies. “CitiMortgage remains a critical part of serving our customers, deepening relationships with existing and prospective retail bank clients, and driving growth in our core markets. We will continue to originate loans for current and new clients.”

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