From advertisements on the information highway to grass-roots promotions at local American Legion halls, mortgage lenders are in high gear to counter this current slump loan business.

American Home Funding Inc. this month began allowing loan officers to advertise on the Internet. The access brings the Richmond, Va., lender's services to countless young people, who represent a large pool of first- time homebuyers, said Alton C. Buie, senior vice president.

"We see consumers as being more sophisticated," Mr. Buie said. "And in our approach we're testing new marketing channels."

American Home Funding is not, however, abandoning the basic marketing strategies that help it sell mortgages for upper-income homes in Manassas, Va., and off-base housing for enlisted personnel in Fayetteville, N.C., outside Fort Bragg.

"No one can compete on rates for any length of time," Mr. Buie said. "That's why personalized service has never been more important. We're a strong believer in that."

To get the word out, American Home Funding is supplying its loan officers in 10 states with videos that tout the affordability of mortgages. The videos, developed by the Mortgage Bankers Association of America, are aired by public service stations in sales representatives' areas.

Sales are improving, said Mr. Buie, who believes the promotional efforts are contributing to the pick up.

Mortgage lenders across the country agree that a soft market reinforces the need for treating the customers that are out there well.

"You've got to be super customer-oriented in this marketplace," said James Geeslin, president of First Bankers Mortgage Corp., Waco, Tex. "It's a dog-eat-dog market out there."

Terry W. Claus, chairman of Home Financing Center in Miami, agrees.

"We've seen a downturn in the market" since rates rose above 7%, Mr. Claus said.

To raise their profiles, mortgage lenders are sponsoring more homebuying seminars at hotels and American Legion Halls.

Loan officers with Home Financing Center give a very targeted message: housing is affordable.

Seminars drive home the point that mortgages are very available, and that customers can obtain loans with as little as 5% down, Mr. Claus said.

"They always want to know, 'How much money do I have to come up with,'" Mr. Claus said. Through the seminars "they get the exact information they need."

Home Financing Center is also taking to the airwaves - from Fort Lauderdale to the Florida Keys - to tout its rates.

Radio "seems to be the ticket for us," Mr. Claus said.

Less-than-favorable rates sent some companies behind the scenes in search of business.

Boston-based Graystone Mortgage Corp. is turning its attention toward small banks in New England that need to outsource mortgage underwriting and servicing.

"It's hard for them to hire and keep on people experienced enough to do this," said Walter W. Vail, who was brought on board last week to lead the push into small banks.

Graystone plans to handle virtually all of the work after loan officers at the banks take down customer information.

"We private-label for the banks," Mr. Vail said. "We want this to be as seamless as possible."

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