In a sharp departure from business as usual, Wells Fargo & Co.'s huge mortgage bank said Wednesday that it has agreed to sell virtually all of its loans to a single secondary market agency-Freddie Mac-in exchange for a streamlined loan approval process.

The first-of-its-kind agreement permits Norwest, the nation's leading mortgage originator, to use its own automated underwriting system to originate the loans.

In 1998, Norwest divided its secondary market sales of $57.6 billion of loans between the two government-sponsored enterprises, Freddie Mac and Fannie Mae.

The Norwest-Freddie deal came on the heels of announcement Tuesday of strategic alliances between Microsoft Corp. and Chase Manhattan Mortgage and Countrywide Home Loans. Analysts said the deals underscore the increasing importance of strategic alliances in the home loan business.

The latest deal is "really a reflection of the changing relationship between the GSEs and mortgage lenders," said Stanislaus Rouyer, an analyst for Moody's Investors Service. "The GSEs are facing larger players than before because of consolidation. They have to show more flexibility.

"It's a bold move for Norwest, to almost cut off the relationship with Fannie Mae," he added. "It will put more pressure on the GSEs to accommodate the larger lenders."

Peter Wissinger, Norwest Mortgage group managing director for sales and operations, called the arrangement a "win-win" situation. "We can use our own scoring system, which we're comfortable with, and we don't have to absorb the additional expense of integrating new technology," he said.

Ultimately, the deal will bring down the cost of loans to consumers, making Norwest more competitive, he said. Norwest originated more than $109 billion in loans in 1998, setting an industry record.

Norwest declined to elaborate on the terms or length of the deal.

Michael Lepore, senior vice president and national sales director for Freddie Mac, said the alliance is for a "stated term" with an option to renew. The agreement will also allow for reduced mortgage insurance levels for Norwest, but will not require the Des Moines-based lender to use Freddie's Loan Prospector for this, either, Mr. Lepore said.

The alliance shows that Freddie Mac "is willing to work with high quality sellers on open-architecture," and respects "their ability to manage risk," he said.

Freddie is open to other partnerships with "quality accounts" of any size. Some of the criteria include "complementary interests, high credit quality, (and) a strong willingness to work together to develop new products and programs to benefit the consumer," Mr. Lepore noted.

A spokeswoman for Fannie said the company was confident it would "continue to be the secondary market leader" with market share of nearly 60%.

She said Fannie Mae's Desktop Underwriter "has become the industry leader" and that the agency has been able to integrate the system with lenders' systems "in many cases."

Fannie "has always been open to customizing relationships with lenders both large and small," she said.

Norwest's alliance with Freddie Mac comes as lenders, mortgage insurers, and other financial services companies have been banding together, trying to curb the influence of Fannie and Freddie. And Wednesday sources in Washington noted that Amerin Corp. chairman Gerald L. Friedman was chosen to head the trade group.

But the Norwest partnership indicates that battles over such issues as mortgage insurance will take a back seat as lenders seek ways to cooperate with the GSEs, some analysts said.

"The message here is that the industry is not going to launch a revolt against Fannie and Freddie," said Kenneth Posner, a Morgan Stanley analyst. "The big players are smart enough to know that they need to work out partnerships, rather than fight to put the technology genie back in the bottle," Mr. Posner said.

Meanwhile, some midsize lenders are content with their relationship with the GSEs. "We're pretty good at running the agencies' models and for us, they're not really a burden to use." said Peter Paul, president of Headlands Mortgage Co., Larkspur, Calif.

In the alliances announced Tuesday Chase, Countrywide, and Prism Mortgage Co. of Chicago will offer their loans through Microsoft's HomeAdvisor on-line real estate Web site, bringing the total offering loans on the site to seven.

"Banks have been somewhat reluctant to deal with Microsoft because they fear Microsoft's intrusion into their business," particularly in mortgage lending, said Richard Beidl, an analyst with the Tower Group in Needham, Mass.

But "lenders are becoming more comfortable with Microsoft's presence in their market and perceive it as less of a threat," Mr. Beidl noted.

The HomeAdvisor model is "very bank friendly,"said Ian Morris, Group Product Manager for MSN HomeAdvisor in Redmond, Wash. "The relationship is completely between the consumer and the bank as soon as the consumer narrows the choices down."

The presence of Chase and Countrywide on the site "really lends a lot of credibility," to it, Mr. Beidl said.

Countrywide and Microsoft have been business partners on the technology side for the last four years, and this agreement is "the next natural progression," said Cameron King, executive vice president of Countrywide's electronic commerce division.

"Microsoft HomeAdivsor is the only one that is truly looking at the technological issues of marrying the buying of homes with the financing of homes," Mr. King said.

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