Michigan National Bank has begun a joint venture with Rock Financial, a small, Internet-oriented mortgage bank, to originate home loans.

The two Michigan companies are also negotiating with the servicing giant HomeSide Lending to make both the joint venture and Rock Financial itself "preferred partners" of HomeSide, said Douglas Ebert, chief executive of Michigan National.

HomeSide, based in Jacksonville, Fla., and Michigan National are both owned by National Australia Bank. HomeSide's preferred partners, BankBoston, Bank One, and People's Bank, sell it all their loans, including the servicing rights.

If Rock Financial and the new Rock Home Loans Michigan National joined the roster, HomeSide would gain another source of growth for its massive $118 billion servicing portfolio.

Michigan National's goal is to keep offering home loans but cede the nitty-gritty to others with more expertise. Under that setup, Mr. Ebert said, "we sell it (and) somebody else is the manufacturer."

The joint venture is expected to at least triple the bank's origination volume in the next year or two, he said.

Michigan National has $10.7 billion of assets, 192 branches, and some 500,000 customers. But it has not been a major player in the mortgage business; last year it originated a mere $300 million. Rock Financial originated more than $2 billion.

About 60 of the bank's employees will move to the new limited liability company. They will be joined by 10 from Rock Financial.

William Emerson, former vice president of retail lending at Rock Financial, will run the new company, which will be 70% owned by Rock.

Rock Financial's experts will train the former Michigan National personnel in sales, marketing and technology. In exchange, Rock will get better distribution through Michigan National's branch network and customer base.

All Michigan National's future originations will be done by the new company, but Rock Financial will continue to make home loans on its own.

Rock Financial has 18 branches and a call center, but is carving itself a niche on the Internet. It began taking applications on-line last month, and Internet volume already has surpassed the company's biggest branch, which originates $30 million per month, Mr. Gilbert said.

Michigan National has sold most of its production to HomeSide since HomeSide was acquired by National Australia, but it was not considered a preferred partner, a HomeSide spokeswoman said.

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