Norwest Mortgage Co., has landed a deal with Wells Fargo Bank, San Francisco, to originate residential first mortgages for Wells' customers.
Norwest Mortgage, based in Des Moines, will serve mortgage customers through Wells Fargo's branches and through its telemarketing center in San Diego.
The intent to exit the mortgage originations business and use a third party to provide loans to its customers was announced by Wells in late February. At the time, Countrywide Credit Industries, Prudential Home Mortgage, and Norwest were said to be likely candidates.
Under the agreement, Norwest will originate, underwrite, and fund the loans and Wells will service them, thus retaining control of its customer list. The loans will initially be held in Wells Fargo's $9.1 billion mortgage servicing portfolio, said spokesman Dan Conway.
Wells Fargo will hire about 100 sales people. Until the deal is final, expected by the third quarter, the staff will originate loans for Wells through a correspondent relationship with Norwest.
After completion of the deal, the staff is likely to be hired by the alliance. The sales staff will work out of Wells' bank branches.
Affinity lenders generally market home loans to members of a trade or professional group. Outsourcing of loans by a company as big as Wells is said to be unprecedented. Last year, Wells originated about $2.7 billion in loans.
In making its decision, Wells looked for a mortgage company that offers economies of scale in originations and processing, has the capacity to offer a large variety of loans at competitive rates, including low-income loans, and is able to apply up-to-date technology. Norwest fit the bill, Mr. Conway said.
Norwest acquired Directors Mortgage Loan Corp., Riverside, Calif., last month. Originations for the two companies together totaled $30.3 billion in 1994.