ABN Amro Mortgage Group Inc. aims to broaden its consumer offerings by expanding its secondary market relationships.
The Ann Arbor, Mich., lender’s capital markets group has begun marketing whole loans to institutional investors, and last month John Buchanan was named its national sales manager. Mr. Buchanan was the business manager for U.S. fixed-income distribution at ABN Amro Inc., the U.S. broker-dealer arm of the mortgage unit’s Dutch parent, ABN Amro Holding NV.
Maria Fregosi, the head of the capital markets group and a group senior vice president at ABN Amro Mortgage, said Mr. Buchanan built relationships with institutional investors in his last job and others at ABN Amro. Now he can call on those investors to buy mortgage assets, Ms. Fregosi said.
Her team now sells loans to 400 or so investors, mostly banks and “a smattering of others,” she said. By adding nonbank investors — including insurers, pension funds, and collateralized debt obligation managers — ABN Amro Mortgage hopes to meet borrowers’ demand for products like interest-only mortgages, she said.
“The more we can broaden the investor base, the more we can offer those new products,” Ms. Fregosi said.
The group also sells securities created from the mortgage unit’s loans by ABN Amro Financial Services Inc., which has its own distribution channels. (Ms. Fregosi said whole loans make up about 90% of her group’s sales.)
Originations at the mortgage unit dropped 57% last year, to $56.5 billion; industrywide volumes slipped by less than a third.
In an interview in February, Thomas M. Goldstein, ABN Amro Mortgage’s new chairman, president, and chief executive, acknowledged that the unit was “without some of the product we wanted to have” as refinancings waned last year.
(Before starting his new job, Mr. Goldstein had been the chief financial officer of ABN Amro Mortgage’s immediate parent, LaSalle Bank Corp.)
ABN Amro considers a strong product set to be especially important because of the emphasis put on funding loans through brokers, whose market knowledge and focus on commissions can lead them to quickly drop a lender that cannot meet borrowers’ needs.
Ms. Fregosi said her group has a 10-person sales force, which has not been increased. Mr. Buchanan succeeded Jeff Harry, who left ABN Amro a few months ago, she said.
Institutional investors will find that close ties with its lender parent make her group well equipped to create loans to meet their guidelines, Ms. Fregosi said.
“The beauty of dealing with the mortgage company is we can actually go and try to create it on the front end” for investors, she said.
