Norwest Mortgage Inc. is leading the way as lenders scurry to form business alliances with real estate brokerage companies.
Sources say the Des Moinesbased lender is close to signing its second joint-venture agreement with a broker, Baird & Warner, Chicago.
Norwest officials declined to comment. Baird & Warner executives did not return phone calls.
Last year, Norwest formed a joint venture with Long & Foster Realty, Fairfax, Va.
Norwest has also been in discussions with John L. Scott Real Estate, a Bellevue, Wash., real estate broker, said Jerry L. Moon, an executive vice president at the realty company. The broker is also holding preliminary talks with Washington Mutual Savings.
Others in Market
Among the other major real estate companies mentioned as considering joint ventures or partnerships with lenders are Allen Tate Co., a Charlotte, N.C., broker. Gundaker Realtors, St. Louis, recently formed a venture with Mercantile Bank, also in St. Louis.
Lenders said they are hungry to find new means of originating loans now that refinance activity has wilted.
And real estate brokers have seen a greater share of commissions from home sales paid out to hot-shot agents, leaving less profits. That has forced many to search for new forms of fee income, industry insiders said.
Peter J. Wissinger, a Norwest executive vice president, said "far more than a dozen" real estate companies have approached the lender about forming joint ventures. And he said many lenders were out searching for joint venture deals.
"I think everyone is talking," he said. "The word 'clamor' would not be an exaggeration."
Profits could be extensive from such lending arrangements. John L. Scott, for example, sold 12,500 houses last year, worth $3.2 billion.
Peter Hunt, chairman of Master Mortgage Corp., Chicago, estimated that a quarter of the nation's top real estate companies will have a joint venture with a lender by the end of the year.
Mr. Hunt said joint ventures were a quick way for brokers to get into mortgage lending. By linking up with a large lender, real estate outfits ensure that they will get a wider menu of loan products and the expertise to make mortgages successfully.
Lenders and brokerage companies do not seem very concerned about the Real Estate Settlement Procedures Act. Despite pending Respa rule changes that may come as soon as this month, joint-venture talk is still bubbling.
Without knowing how the rules will change, "it will be difficult for companies to know the most efficient way to set up these programs," said Susan E. Johnson, executive director, Real Estate Services Providers Council, a Washington lobbying group.