Banc of California is unloading $2 billion in business-purpose mortgage loans obtained after a merger with PacWest Bank and is now selling them off through Morgan Stanley.
These loans, known as debt-service coverage loans, cater to investor owners who lease out properties, underwritten based on rental revenue rather than traditional metrics.
The bank may continue to sell parts of the loan portfolio in the future to enhance profits amidst regulatory changes like Basel III Endgame.
Regional banks like Banc of California are streamlining balance sheets before the enforcement of Basel III Endgame, often offloading assets to private lenders unconstrained by capital regulations.
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