IN A RESTAURANT IN DALLAS almost 20 years ago, Lainie Kazan was singing and some businessmen in the front row were celebrating boisterously. Ms. Kazan asked them what the occasion was.

"Why, we've just introduced the biggest car-wash machine in the world," their leader replied.

Terrance Hodel was also in the audience that night, and he says he thought to himself, God, am I lucky to be in the mortgage business.

Today, Mr. Hodel, 50, is president and chief operating officer of North American Mortgage Corp. of Santa Rosa, Calif. He joined the company in 1979 when it was called Wells Fargo Mortgage Co. And he is still utterly delighted to be in mortgages.

"Last year was the most extraordinary year I've ever had in the mortgage business," he said. "Our originations grew so much that we've reached a level that we never even dreamed of in the past. And we went public at the same time."

This year hasn't exactly been a downer for Mr. Hodel, either. Securities analysts have become enamored of North American's stock, and the shares have been riding high, trading recently at about $26.50. The company went public at $11.50 a share last year.

In the second quarter, the company earned a record $13.1 million, up 67% from profits in the quarter a year earlier. For the first half, profits have climbed about 50%. And loan originations continue to soar, reaching about $7 billion in the half, up about 40%.

North American has also managed to escape, at least in part, the prepayments that have been plaguing the mortgage business this year as the obverse of the refinancing boom. And Mr. Hodel says modestly that a certain amount of luck was involved.

"Our theory is that our main business is producing a servicing contract," he explains. "It's an investment decision whether you want to keep that contract or sell it. We want to remain flexible."

|We Made the Right Choice'

That investment decision last year was to sell about 40% of its servicing. And currently, it is selling 40% to 45%. The sales have helped insulate North American against a severe prepayment drain.

"In retrospect, we made the right choice," Mr. Hodel says. But we now intend to further build our servicing portfolio."

Limited Effect on Earnings

Mr. Hodel adds that much of the retained rights are on loans originated by North American. Since such rights are not carried on the books as assets, the runoff has only limited impact on earnings.

One of the secrets of North American's success has been its adeptness at telemarketing, and Mr. Hodel says he is expanding those efforts: "Basically, we have added loan officers and added systems. And we are doing more outbound calling -- you know, those people who always call you at dinner."

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