Norwest Sets Its Sights On a Place in Top Ranks In Securitizing Jumbo

Norwest Mortgage Inc. is already the largest securitizer of conforming loans. Now the mortgage colossus has its sights set on topping the jumbo securitization market as well.

"We expect to be one of the largest, if not the largest, jumbo issuer in the country," said Mark L. Korell, Norwest Mortgage's group president.

As a result of its acquisition of Prudential Home Mortgage in May, the Des Moines unit of Norwest Corp. added Pru's jumbo securitization capabilities.

In June, Norwest Mortgage formed a conduit, Norwest Asset Securities Corp., or Nascor, to start issuing its own jumbo securities.

Private conduits are entities that buy nonconforming loans such as jumbos or subprime credits and sell them in the secondary market as mortgage-backed securities.

Government-sponsored secondary market agencies such as the Federal National Mortgage Association and Federal Home Loan Mortgage Corp. are not allowed to buy jumbo loans - those above $207,000.

The addition of jumbo securitization operations was a little-noticed byproduct of the Prudential deal. The acquisition augmented many of Norwest Mortgage's existing operations, but the inclusion of jumbo securitization enabled Norwest to enter a new business.

Mr. Korell said that, before the Prudential acquisition, Norwest had not issued its own jumbo securities, usually selling the loans directly to Wall Street instead.

Other conduits with a strong presence in the jumbo market are Residential Funding Corp. and CWM Mortgage Holdings.

One Wall Street dealer said that, though securitizing jumbo loans is a new step for it, Norwest should have no problem competing with other conduits because it essentially left Prudential's operation intact.

Mr. Korell said that most of Prudential's employees from this unit were hired within a month after the deal was closed and the subsidiary hasn't skipped a beat.

Nascor issued its first jumbo transaction in July. The conduit has priced nine transactions so far and has settled the first six.

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