HomeBanc Mortgage Corp. is putting affluent borrowers in luxury homes - and providing investment advice to help keep them there.

Through a new unit that combines mortgage lending and private banking services, the Atlanta-based subsidiary of First Tennessee Corp. plans to be a giant among jumbo lenders, said Patrick S. Flood, HomeBanc's president.

"This will position us to dominate the upper end of the marketplace," he said.

HomeBanc's move illustrates the steps mortgage bankers are taking to gain an edge with borrowers. Since interest rates don't vary much among lenders, mortgage banks are looking for other ways to build good will and loyalty.

Financial planning is a "terrific" way to build business, said Diane M. Casey, national director of financial services at the Washington accounting firm of Grant Thornton.

"There is clearly growing demand for wealth management services," for borrowers and other bank customers, Ms. Casey said.

A number of professional athletes, doctors, and chief executives have already borrowed through HomeBanc's unit, set up late last summer and headed by a financial planner recruited from Merrill Lynch & Co. The unit is offering loans up to $4 million to cover 100% of a home's purchase price.

While loan officers handle details of the mortgage, the financial planner, Robert Cunningham, works with borrowers to hedge against taxes and invest in a variety of security instruments.

Hugh Connerty, chairman of Outback Steakhouses, a national chain, said he received a mortgage for a home in the tony Atlanta suburb of Buck Head and gained valuable investment guidance by working with HomeBanc.

"I was really impressed with their unconventional approach," Mr. Connerty said. "I never had that kind of service before."

HomeBanc will receive fee income from Merrill Lynch, which is underwriting the mortgages and serving as custodian for collateral, such as securities, that backs the loans.

Fee income opportunities will expand as HomeBanc adds more allies, Mr. Flood said. For instance, HomeBanc's parent, a bank holding company, is a bond powerhouse that would offer investment opportunities to borrowers.

Mr. Flood said HomeBanc will seek additional income by aligning with certain rival banks in Georgia to provide products and services. Unfortunately, First Tennessee does not have a presence in the state, Mr. Flood said. "But rather than lose a whole (banking) transaction, I'd rather secure fee income for being involved in some way."

HomeBanc also is looking at an affinity program where luxury hotels and car makers would offer discounts to the unit's borrowers.

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