First Federal Bank in Santa Monica, Calif., has begun to offer the mortgages of outside lenders, in addition to underwriting its own home loans.

The company started the brokerage program last month after watching business drop in Southern California's lackluster residential real estate market.

"There's not a lot of loan volume," said Douglas Stearns, senior vice president. "We decided to try another way to attack the market."

Mr. Stearns said the program will help when the fit is lacking between First Federal and customers because of pricing, loan amount, property, or program-related issues.

The outside mortgage products, he said, "will mostly be loans we don't do ourselves."

By acting as broker, First Federal will earn fee income and avoid turning customers down, Mr. Stearns said.

First Federal has 25 outside loans in the works since beginning the program a month ago, Mr. Stearns said.

California Federal, NationsBank Corp, and Countrywide Credit Industries are among the eight lenders whose products are available through First Federal. The thrift is negotiating with four other lenders about adding their mortgage products, Mr. Stearns said.

First Federal's approach, which several other thrifts have used over the years, has merit, consultants said.

The program "puts more products on their shelf and gives them the ability to serve more customers," said David M. Partridge, director of the national financial institutions practice at Towers Perrin in New York.

But, Mr. Partridge added, the thrift must take care to represent customers' best interests over the interests of the outside mortgage companies.

Mr. Stearns said the program was designed to place customers first, whether they end up with a First Federal mortgage or another lender's product.

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