Michigan National Corp., which quit the national mortgage lending scene in 1994, is back in the mortgage spotlight now that its parent, National Australia Bank, is buying HomeSide Inc.
Michigan National sold Independence One Mortgage in 1994, a year before National Australia acquired the Farmington Hills bank. Independence One had offices in 10 states and at one time serviced a portfolio that was as large as $14 billion.
Douglas Ebert, Michigan National's chief executive officer, said the bank still originates loans through its 191 branches in Michigan. And once the HomeSide acquisition is complete, the bank will sell the loans it originates to HomeSide.
"We will clearly be a Michigan-based retail arm for HomeSide," Mr. Ebert said.
HomeSide does not have a strong presence in the Midwest. About 7% of its originations come from Michigan, Ohio, Indiana, Illinois, and western Pennsylvania, Mr. Ebert said.
But another benefit for HomeSide could be the introduction of a new product to its loan lineup. Michigan National unveiled a mortgage called the Tailored Home Loan this summer.
Mr. Ebert said the loan, which was originally introduced through National Australia Bank in Hong Kong, allows a borrower to design a flexible payment schedule. The borrower can convert from a fixed rate to a floating rate without having to refinance.
In addition, the loan features elements of a traditional mortgage combined with a home equity loan. The borrower can increase monthly payments and subsequently reborrow the extra money paid without extending the terms of the loan.
Mr. Ebert said loan application volume in recent months is up 36% from a year ago as a result of this product.
"This has reenhanced our image as a mortgage lender," he said. "We really have not done much else new in our mortgage business than introduce that product."
If this product could be successfully launched through HomeSide, it could have national ramifications. HomeSide, with nearly $11 billion of originations in the first half, is the fourth-largest originator in the country.
But U.S. mortgage lenders don't seem to be concerned about the Tailored Home Loan or any other new product that HomeSide might import.
Angelo Mozilo, vice chairman of Countrywide Credit Industries Inc., said foreign loan products are "inferior" to those designed in the United States. Countrywide is the nation's second-largest originator.
And Dan Gilbert, chief executive officer of Rock Financial Corp., a Bingham Farms, Mich., mortgage bank, said the Tailored Home Loan has not had a huge effect on the Michigan market.
"We've heard advertisements for it, but frankly I don't think it's caught on. I think the jury is still out on it," Mr. Gilbert said.
Rock Financial, which originates A-quality and subprime loans in Michigan, Illinois, and Ohio, is one of the largest lenders in Michigan. Mr. Gilbert said his company is on track to originate $1.5 billion of mortgages this year.
