Pardon Mark Korell if he sounds a bit like the proud new owner of a muscle car. He recently took charge of General Motor Corp.'s mortgage unit, and he is unabashedly thrilled by its horsepower.

"I look at it as a $21 billion production machine," he says.

Get ready for Mr. Korell to burn some rubber. GMAC Mortgage Corp., based in Elkins Park, Pa., is preparing to expand in virtually all its lines of business: originations, securitization, servicing, and lending to other mortgage banks.

The company, already a major force in each of those fields, wants nothing less than to take a place among such true industry leaders as Countrywide Credit Industries, Prudential Home Mortgage, and Norwest Mortgage.

"Those companies have strong commitments from their owners, and so do we," Mr. Korell says. "They have very good people; we believe we have equally good people. They have aggressive postures toward innovation, and we have that as well."

Reversal of Fortune

All this marks an astonishing change of mood at GMAC Mortgage.

Just a year ago, the company was slamming the brakes as its immediate parent -- General Motors Acceptance Corp. -- wrestled with debt downgrades and a feared cash crunch. In fact, the parent even considered selling the mortgage unit and refocusing on its core business of auto finance.

As the uncertainty stretched from weeks to months, GMAC Mortgage plunged in industry rankings. In servicing, the main source od its revenues, the company fell to No. 8 on June 30 from No. 3 a year earlier.

This summer, however, things suddenly changed. GM loudly proclaimed that it would not only stay in the mortgage business but expand. The mortgage unit went so far as to take out newspaper advertisements blaring "Not for Sale."

Making It Work

According to Robert O'Connell, chairman of General Motors Acceptance, the change of heart came about because the liquidity problems proved less severe than expected. Keeping the unit, he adds, makes sense for the long haul because it "gives us a good return on our investment."

Some other sources suggest the GM was simply unable to sell the unit at an attractive price, despite getting bids from General Electric Capital Corp., Norwest, and some other big-name players.

"They missed their shot at selling, so they're going stay in the industry and and try to make a good go of it," said one Wall Street executive.

Changes at the Top

Whether initiated by design or default, GM's renewed commitment to mortgage banking appears to be deep, rivals and others say.

The most compellingg evidence, they say, was the September elevation of Mr. Korell, 46. A lanky midwesterner with a Stanford MBA, Korell had been running GMAC Mortgage's Minneapolis-based securitization arm, Residential Funding Corp.

"Mark Korell is one of the most respected and competent executives in mortgage banking today", says Marvin Moskowitz, chief executive of Prudential Home Mortgage, the No. 2-ranked mortgage company.

"He's a builder and a visionary," adds Scott Shay, a managing direcctor at Ranieri & Co., the New York investment concern.

Mr. Korell took the reins at Residential Funding in 1986, when it was owned by Salomon Brothers. He remained its chief when it was sold first to Anchor Savings Bank, Hewlett, N.Y., and then to GM. Previously, he served for three years as chief executive of First Bank Systems Mortgage Corp., Minneapolis.

As chief executive of GMAC Mortgage, he has been thrust into retail mortage lending on a much greater scale than ever before in his career. The company has about 100 branches nationwide and expects this year to pull in some $8 million of loans through those offices, telephone marketing, and ties to affinity groups.

In expanding the retail business, Mr. Korell plans to move with with great care -- and for good reasons.

"I'm nervous, like everyone in the retail business, about the possibility that the refinancing boom is going to end," he says. "You have to be very concerned about not locking in a lot of two-and three-year leases on branch offices in a market that ultimately is going to come down."

Thus, Mr. Korell is concentrating not so much on adding branches as on bolstering the business with affinity groups.

More Mortgage Personnel

Perhaps not surprisingly, the company's biggest group so far is the 860,000 U.S. employees and retirees of General Motors Corp. Those people account for a full 20% of all originations.

At a Saturn plant in Tennessee, for instance, a mortgage officer is available to workers both before and after their shifts.

"We're going to be looking at putting more mortgage personnel in or near GM plants," Mr. Korell says. He also wants to forge ties with auto parts suppliers, universities, and nonprofit housing groups.

Meanwhile, Residential Funding is also looking to grow, thanks to the increased availability of corporate capital.

Expanding Volume and Variety

The company's main business is buying large-balance mortgages from 350 lenders around the country and repackaging the loans as securities.

This year, the unit expects to handle some $13 billion of loans, bringing GMAC's total mortgage intake to $21 billion. And, Mr. Korell says, RFC is exploring ways to expand both the volume and varieties of mortgages that its buys.

Then there's servicing, the backbone of mortgage finance. In addition to growing its servicing business through originations, GMAC appears to be regaining an appetite to buy servicing portfolios from other lenders, market sources say. A few years ago, it was a highly active buyer.

"If the business is there at the right price, we're certainly going to be there as a possible buyer," says Mr. Korell.

Pedal to the metal, man.

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