The newly expanded Chemical Banking Corp. is intent on emerging as one of the nation's premier retail lenders, and mortgages are a big part of its efforts.

The company plans to originate $10.5 billion in home loans this year, up 50% from the $7 billion reported last year by Chemical and its merger partner, Manufacturers Hanover Corp., company officials said.

That's well ahead of the 20% to 33% growth expected for originations industrywide.

A Key Hiring

In the latest sign of its ambitions, Chemical hired mortgage superstar Luke S. Hayden to direct sales of loans to the secondary market. Mr. Hayden, who held a similar post at Security Pacific Corp., turned down a key mortgage post at BankAmerica in April, just before it merged with Security Pacific.

The hiring of Mr. Hayden "demonstrates that the mortgage business is a key growth business for the bank," said Thomas Jacob, Chemical Bank's executive vice president for national consumer lending. "We really needed someone of Luke's stature and track record to handle the secondary market function for us."

The secondary market post is important, since Chemical sells most of its new mortgages and earns fees from servicing them.

Creation of Unit

Until now, Chemical's capital markets group coordinated mortgage sales. The creation of a secondary market unit within the consumer lending area emphasizes the rapid growth in the bank's mortgage lending. Mr. Hayden, 35, said it was the opportunity to build that unit that drew him to Chemical.

Mr. Hayden also will manage the mortgages kept on the bank's books; the portfolio now stands at about $6 billion.

Mr. Hayden is Chemical's third senior vice president with mortgage expertise. The other two - Chemical veterans Stephen Rotella and Kenneth Wohst - handle servicing and production, respectively. All report to Mr. Jacob.

Moving into Top 10

Chemical ranked No. 11 among nationwide mortgage originators in 1991, and is likely to crack the top 10 this year, said Mark Kamm, executive vice president of SMR Research.

Chemical's historical strength in mortgages has been wholesale originations - purchases of new loans from other lenders. But in the past two years, it has been cranking up retail production, an effort that has been heightened by the merger. Chemical and Hanover combined have the biggest branch system in metropolitan New York.

Mr. Jacob said retail should account for about 50% of Chemical's total originations this year.

In addition to its branches in New York, New Jersey, and Texas, Chemical originates retail mortgages from a far-flung network of 68 consumer finance offices. The total includes 43 mortgage offices of the failed Centrust Bank that Manufacturers Hanover acquired last year.

Mortgage brokers helped originate 45% of all home loans made last year, up from virtually zero in 1980, according to a new study.

The National Association of Mortgage Brokers, which compiled the study, identified more than 10,000 brokerages nationwide. Two-thirds of them are concentrated in three states: California, Florida, and New York.

The study was funded by the secondary market agencies and some of the largest mortgage lenders in the country.

Mortgage brokers match consumers with lenders, process applications, and forward them to lenders for closing. In return, they share some of the fees paid to lenders.

Banks, thrifts, and mortgage companies have turned increasingly to brokers in recent years as an economical alternative to lending from their branches.

The Downside

The link is not without risk, however. The study found that the typical brokerage has just $75,000 of net worth. Moreover, 41% of brokers do not provide lenders with legal guarantees as to the quality of loans they deliver.

"If something goes wrong, the possibility of the lender being made whole by the broker is not very great," said Robert Englestad, a senior vice president at the Federal National Mortgage Asssociation.

Fannie Mae and its rival, the Federal Home Loan Mortgage Corp., have been urging lenders to closely monitor the quality of loans they get from brokers.

The study found that the typical brokerage has formal relationships with 25 lenders, but deals mainly with its favorite three. That affords those three lenders a good chance to analyze the quality of the loans, Mr. Englestad said.

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