Now that Norwest has officially begun operating the residential mortgage program at Wells Fargo & Co., industry observers are waiting to see if the effort spawns imitators.
Under the ground-breaking alliance, Norwest Mortgage Corp.'s lenders are serving up Norwest products at Wells Fargo's 616 California branches.
Never before has one banking company allowed another such direct access to its customers, analysts said.
Until now, banks have gone as far as striking marketing agreements with independent real estate brokers. A venture that PNC Mortgage of America began in February with Coldwell Banker Corp. is one recent example.
But now, Norwest and Wells are teaming up through an arrangement from which both banks expect to profit. Norwest will originate all first mortgages for Wells Fargo customers and receive servicing fees on government loans. Wells Fargo expects to service conventional mortgages originated through the program, dubbed Towne Square Mortgage.
If the team approach meets expectations, some banks may follow the lead, analysts said.
"It might be a vehicle for small and midsize banks to provide for their customers more efficiently," said Charles M. Hebert, principal at Ferguson & Co., Irving, Tex.
But Mr. Hebert and others doubt whether other large banks will embrace the idea of letting a comparable-size institution in their branches.
Banks do not like to share customer lists with each other, and cultural differences between institutions may prove insurmountable, said Allen Hardester, a consultant based in Columbia, Md.
The arrangement may prove inequitable to Norwest, which is handling all originations but not all servicing, which is where the money is, Mr. Hardester said.
Intensive marketing and an appropriate array of products are crucial to the effort's success, observers said.
They believe the efforts are especially important in California, where thrifts are very good at selling indexed and other variable-rate products to residents.
Mark C. Oman, president of Norwest Mortgage, said the arrangement with Wells Fargo boosts mortgage products from about a dozen to more than 50.
He also said the teaming benefits both banks. "Through this unique alliance, Wells Fargo is able to increase the services it can provide to customers," Mr. Oman said. "Norwest Mortgage is able to expand its outreach into the California market."
Wells pulled out of the residential business last spring, a move that led to 450 layoffs. The company, which originated $2.7 billion of mortgages last year, had seen its profit margins beaten down by stiff competition.
The venture with Norwest jump starts the program by taking over Wells Fargo's origination center in San Diego, and it provides economies of scale and technologies that were lacking in the past, a Wells Fargo spokesman said.
Norwest has already hired about 20 mortgage loan officers, and is on its way to having at least 100 by yearend. The loan officers will cover Wells Fargo branches, and the mortgage company will operate a toll-free number.
