Bankers are looking to home builders as foundations for additional growth.
The mortgage units of Norwest Corp., First Tennessee National Corp., and Fleet Financial Group are courting residential construction companies with the aim of attracting borrowers early in the homebuying process. To woo builders, lenders often sponsor promotions and help spur sales by holding open houses.
Construction companies appear to welcome the expertise that mortgage companies can supply. "We're not interested in opening our own mortgage business," said an executive at a large residential builder in Atlanta. "We leave that to the people that know it best."
Norwest last week furthered its efforts among builders by striking a deal with Mobil Land Development of Fairfax, Va., to provide on-site mortgage services at 14 developments.
The arrangement with the Mobil Oil subsidiary - among the largest Norwest has undertaken with a developer - covers hundreds of homes whose prices range from $90,000 to more than $1 million.
The agreement will benefit Norwest, Mobil, and the areas where the lending is offered, said Dan A. Hanson, the Norwest Mortgage senior vice president overseeing the program.
"This is an opportunity for local markets to benefit from the strength and efficiencies" that Norwest and Mobil provide, Mr. Hanson said.
Mark Oman, president of Norwest Mortgage, said the builders channel is among the Des Moines company's fastest growing. Norwest plans to spend 1996 deepening a national base that has developed over the past few years, Mr. Oman said.
First Tennessee's HomeBanc Mortgage Corp. is also building its builders channel - by using market data to spot hot locations in the Southeast.
"We look for areas that will have good job growth and good housing growth over the next five years," said Patrick S. Flood, president of the unit.
"It makes more sense to us" than going into an area cold, Mr. Flood said.
HomeBanc Mortgage began operations in booming Atlanta, which still accounts for most of the lender's business. The company expanded into Fort Lauderdale, Fla., in late 1992, and, in 1994, added operations in Orlando.
HomeBanc will use its base to expand further into South Florida and Georgia, Mr. Holmes said.
With each step, the company recognizes that it must stay on good terms with builders. "They've been disappointed in the past" by sporadic efforts from other lenders, Mr. Flood said. "That's why we have to do an outstanding job on each and every customer."
Mr. Flood credits a seasoned sales and administrative staff with allowing HomeBanc to expand its operation.
Fleet Mortgage Group has also started pursuing builders. The Columbia, S.C., company this year set up a channel to deal directly with builders.
"We're going into territory that's less occupied," said Jerry Baker, the lender's executive vice president in charge of production.
"It's very promising."
In the past, mortgage companies more often dealt with realtors. But now they recognize that builders "are just as good a source," Mr. Baker said.
The Columbia, S.C., mortgage company expects a lot from the builders unit and its president Sandy Robertson, a veteran real estate lender.
Mr. Robertson will "develop controlled business arrangements with builders, work to strengthen existing partnerships, and develop new business with builders who operate their own lending companies," said Robert Golitz, president of Fleet Mortgage Group.
The builders unit plans to focus west of the Rockies, especially in California, and book business on a local and regional basis. Fleet chose its market carefully, Mr. Baker said. California's continued new construction "fits well with our plans."