Norwest Mortgage Co. could end up a big winner in the merger of Wells Fargo & Co. and First Interstate Bancorp.

Industry experts believe Norwest, which already operates the mortgage program at Wells Fargo, is likely to be given additional responsibility for First Interstate.

The First Interstate effort "will be blended in to the program at Wells Fargo," said Alan Hardester, a veteran industry consultant in Columbia, Md.

Under an arrangement with Wells, Norwest loan officers serve up Norwest mortgage products in more than 600 branches.

For its part, Norwest is operating at Wells as though nothing stands in its way. "We're going full steam ahead" hiring staff and growing the business, a Norwest spokeswoman said.

First Interstate has, since last summer, outsourced its program to a New Jersey-based telemarketer that also handles servicing.

Mr. Hardester said Wells wasn't likely to adopt that approach or bring the entire lending operation program in-house. "They've already decided they can't make any money" running the program internally, Mr. Hardester said. "I don't think anything will change."

Gareth Plank, an analyst with Rodman & Renshaw, San Francisco, said he also expects Wells to use Norwest. "Considering the difficulties Wells had with mortgage banking in the past, it wouldn't be an unlikely scenario," Mr. Plank said.

Whatever the outcome, the combined mortgage operation wouldn't be much of a force because neither company has an aggressive program, Mr. Plank said. "They won't have a major impact on the mortgage market in the western states."

The company that handles First Interstate's program - PHH Mortgage Services - is not quite ready to throw in the towel.

"We feel very strongly we can continue conducting the program" once the merger is complete, said David Goldberg, senior vice president PHH, Mount Laurel, N.J.

He said the program, in full swing for the past two months, is exceeding performance expectations.

Under the agreement with First Interstate, PHH uses telemarketers to solicit business and field inquiries from First Interstate customers. The arrangement, which was announced last summer, displaced 450 First Interstate employees, including loan officers and servicers.

While pleased with the program's progress, Mr. Goldberg did acknowledge it is a time of uncertainty for PHH. "We don't have any idea" about which way Wells or First Interstate might be leaning, he said.

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