HFS Inc.'s plan to buy Coldwell Banker is drawing the eyes of the mortgage industry to what would be a loan-originating giant.

PNC Mortgage Corp. may have an in with this developing colossus through its joint venture with Coldwell.

Once the purchase is completed, Parsippany, N.J.-based HFS, which already owns Century 21 Realtors and ERA Realty, would have 11,125 franchised broker offices nationwide. By most estimates, this would give HFS control of almost one-fourth of all residential real estate purchases in the United States, or about 1 million home sales this year.

"When someone the size of HFS buys Coldwell Banker, it gives everyone pause," said Brian Chappelle, senior vice president of corporate relations at the Mortgage Bankers Association of America.

Of particular interest to lenders is the joint venture between Coldwell Banker and PNC Bank Corp.'s mortgage unit in Vernon Hills, Ill. Dubbed the Home Mortgage Network, the venture places loan officers representing several mortgage lenders in Coldwell-owned offices.

The venture has helped PNC garner about 20% of the mortgages originated from Coldwell offices, said Don Erling, president of the network, during a conference last week.

Although Mr. Erling did not comment on the probability of Century 21 and ERA offices' being linked with the Home Mortgage Network, he did say the joint venture is hoping to see $1.8 billion of originations in 1996, a figure industry observers call very ambitious.

The deal's approval by the Justice Department has cleared away any formal antitrust concern, but some lenders have expressed worry that competition could be hindered by such a colossal joint venture.

Regulations are the best protectors of a free marketplace, said Mr. Chappelle. "If other lenders are allowed to compete with the affiliated partnership, we have no problem with it," he said. "The jury is still out on the ability and the success of joint ventures to provide the service that the customer wants."

Century 21 is looking beyond the Home Mortgage Network for lender affiliations, said one industry observer familiar with the companies. Start-up costs to join the network are too steep for some small real estate franchises, this observer said.

Strong regional real estate companies with their own mortgage lending divisions will provide the greatest competition for HFS' realty network, said Weston Edwards, president of the Laguna Beach, Calif.-based consultancy Weston Edwards and Associates.

And even the head of the Home Mortgage Network admits that it does not guarantee success.

"This is still a relationship business," said Mr. Erling. "We will win or lose the battle sales agent by sales agent."

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