The trend toward megamergers is spawning novel corporate structures in banks' home finance divisions.
NationsBank and Banc One said recently that they are revamping their home lending units.
NationsBank said Friday that it has formed two new home equity units to provide services for NationsCredit Consumer Corp. and its subsidiary, EquiCredit Corp., which NationsBank acquired when it bought Barnett Banks Inc. last year.
Although EquiCredit and NationsCredit will maintain separate brand identities, the two will run everything from underwriting to customer acquisition to quality control through the new units.
A new home equity services division in Dallas will do all underwriting, collections, customer service, compliance, servicing, and quality control for all the bank's home equity business. The unit will be headed by Harold Lewis, an EquiCredit executive vice president, and will have $9.4 billion in managed assets.
The bank also created a home equity sales division in Jacksonville, Fla., to handle product and sales management, customer acquisition and retention, and pricing for EquiCredit and NationsCredit.
The unit will be headed by Rolf Engmann, a Barnett executive who became president of EquiCredit in 1997.
Banc One is combining its home-finance-related divisions-mortgage, home equity, and home improvement lending-under one roof, and giving mortgage division president Donald K. Erling responsibility for them.
"The integration of these businesses will create significant opportunities for us to expand our market position in the home lending arena," said Steven Alonso, president of Banc One's consumer finance division.
The strategy leaves some observers scratching their heads. Banc One's sale of its mortgage servicing portfolio to HomeSide Lending in April of this year could limit its ability to cross-sell, said George Yacik, principal with SMR Research, a consulting firm in Budd Lake, N.J.
Most lenders have yet to be successful cross-selling home equity loans to mortgage borrowers, Mr. Yacik said. In surveys SMR has conducted, lenders said they are trying to cross-sell or planning to do so, but have not commented on their results, he said.
Countrywide Credit Industries, Calabasas, Calif., has done a decent job cross-selling home equity loans to its mortgage lenders, Mr. Yacik added, because of coordination between the two units.
Banc One's plan to combine its home equity and home improvement units is unusual, Mr. Yacik said.
"A lot of companies keep them separate," he said, citing lending giants like Money Store and Green Tree Financial Corp. "It's been a long-standing practice-but I suppose they could work together."
Home equity loans generally are larger and are originated through brokers or retail sources. Home improvement loans often come through contractors.
When Banc One bought First USA in June of last year, First USA was putting together a home equity unit, Mr. Yacik said.
Banc One is still integrating First Chicago's sizable mortgage business into its own, a spokesman said.