Wells Fargo & Co. is relying on a former war correspondent to lead it through the minefield of America's home equity and subprime mortgage market.

Doreen Woo Ho says her short career in journalism - she filed stories from Cambodia for Time magazine during the Vietnam War - gave her a key skill for her current job: the ability to "succinctly convey the message to the public."

In today's market, being calm under fire doesn't hurt either.

Leading the third-largest bank-owned home equity lender, with a portfolio of more than $15 billion of loans and 500,000 customers, Ms. Woo Ho faces a daunting array of competitors as lenders vie for dwindling loan volume. And recent forays in the home equity and subprime markets by the big mortgage buyers - Fannie Mae and Freddie Mac - are expected to put pressure on profit margins.

Wells' mortgage bank, Norwest Mortgage in Des Moines, is the top home lender to minorities and to borrowers in low- and moderate-income neighborhoods, according to PCi Services Inc. Its $4.5 billion of loans to minorities constitutes a 5.6% market share in a line of business that community activists have targeted.

Ms. Woo Ho started her banking career as a public relations officer for Citicorp in Taipei and joined Wells in 1998 as executive vice president of consumer credit. Her 24 years at Citicorp included stints in mortgages and small-business lending. She recently became executive vice president of Wells' national home equity group, overseeing loan channels that include the subprime lender Directors Acceptance, Community Banking, and Norwest Financial, a consumer finance company.

Ms. Woo Ho said Wells' diversity may give it an edge. Few if any of the companies that compete for the same customers can match the range of financial products and services that Wells' units can offer, she said.

Wells' agenda for 2000 is to extend its brand to people in more credit categories, and to serve them through existing and new channels, Ms. Woo Ho said.

The banking company also hopes to ensure competitive pricing that "aligns across the spectrum of credit appropriately," she said. "Not all customers will receive the same rate, but customers with similar profiles should not receive different rates" from various Wells divisions, Ms. Woo Ho said.

The importance of that aim was underscored recently when Citigroup Inc. was taken to task by consumer activists, who said its subprime mortgage units were not referring customers with good credit to its banking unit, which offers better rates.

Wells plans initiative on two fronts, Ms. Woo Ho said.

Using Norwest Mortgage's sales force, it will offer subprime refinance and home purchase loans through Directors Acceptance, a unit it bought in 1995. And it will reach out to consumers with blemished credit, offering home equity loans for refinancing or debt consolidation through advertisements and direct mail.

Home equity loans are "one of the key revenue sources in the consumer side of Wells Fargo," and company research revealed that "demand for the product will continue to grow," Ms. Woo Ho said. It expects to make $700 billion of home equity loans in 2002, versus $500 billion this year.

Mortgage customers and other bank customers present opportunities for cross-selling home equity loans: 60% to 65% of the 15 million Wells Fargo customer households own homes, Ms. Woo Ho said.

Wells hopes to sell a home equity loan to one in every four customers. More than 4% of its mortgage customers also have home equity loans with the company, and about 20% of mortgage customers who are also banking customers have home equity loans, the company said. About 7% of Wells' bank customers who are also homeowners have home equity loans with the company.

And those totals can be expected to improve. Ms. Woo said about 30% of Wells' home-purchase loans in its best markets for cross-selling have home equity loans tied to them. The company also cross-sells to the mortgage servicing customer base - not just at closing, but over the life of the mortgage.

Home equity loans are "definitely a relationship product" that can bring in significant profits for the bank, Ms. Woo Ho said, noting that households with home equity loans have bought twice as many products and services as other households.

The home equity unit, which reports to Mark Oman, group executive vice president of Wells' mortgage and home equity group, differentiates itself from other subprime and home equity lenders by taking a "long-term" approach, Ms. Woo Ho said.

One innovation the company expects to unveil in 2000 is a "credit restoration feature" for customers who improve their credit history and become eligible for better-priced loans. "We would like to come back to the customer and say, 'You have earned an upgrade,' " she said.

Wells is also working to develop ways at the point of sale to "link the customer to the right product regardless of the channel," she said.

"We need to be able to customize home equity products to the consumer," Ms. Woo Ho said. Self-service is increasingly a customer demand, she said, predicting that over the next two to three years the on-line share of its originations will increase to nearly 12%, from 2% this year.

Wells hopes to bring in new customers by bolstering its on-line capability. Internet customers are generally younger, white-collar professionals with high incomes, Ms. Woo Ho said.

Daniel Russell, executive vice president for emerging markets at Norwest Mortgage, says it has become "the largest ethnic minority lender in the country," primarily through its A-paper channel, not through its subprime lending activity.

Through Directors Acceptance, Norwest has tried to "underprice most of the subprime lenders in those markets," he said.

A borrower cannot be referred to Norwest's subprime lending operation until the underwriter in the prime channel has underwritten the loan and denied it and the loan has been reviewed by a manager, Mr. Russell said. The process is designed to prevent "having someone who could qualify for a prime product or rate end up in subprime," he said.

"We got into subprime lending to serve the needs of customers as they were coming to us, so they didn't have to go somewhere else," Mr. Russell explained, noting that Norwest has no intention of becoming the "king of the hill" in the subprime world. Indeed, Norwest targets only its existing customer base over the telephone for refinance loans, he said.

Wells wants to avoid servicing problems and credit quality problems which add to costs. The vast majority of the company's portfolio - over 80% - is prime loans, Ms. Woo Ho said, adding that the majority of home equity and subprime loans are held in portfolio rather than securitized.

"We have to feel at the end of the transaction that the customers have improved their financial condition," Ms. Woo Ho said.

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