Norwest Unit

A founder of PHH US Mortgage Corp. has defected to Norwest Mortgage Inc. to help it compete in affinity lending, a PHH specialty.

Eric H. Cunliffe joined the Des Moines-based lender as a vice president last month. When he left PHH, Mr. Cunliffe was an executive vice president and head of the Mount Laurel, N.J., lender's processing operation in Denver.

Mr. Cunliffe is now heading a new Norwest unit designed to develop mortgage origination relationships with affinity groups such as membership organizations and employees of large companies. He will also seek joint ventures with real estate brokerage companies.

Norwest said the unit would also be able to handle overflow business from the lender's vast branch network.

Norwest's recruitment of Mr. Cunliffe marks a shift in strategy. Until recently, it had focused on developing its branch network and increasing loan originations.

But now, Norwest will take on affinity lending, regarded as a highly lucrative specialty for the bigger players. And it will compete head-to-head with PHH.

With retail originations falling, many lenders, including PHH and giants such as Prudential Home Mortgage Co., Clayton, Mo., have been fighting to create affinity lending relationships.

"With the Norwest reputation and the efficiencies we can produce, I don't have any doubt that we can sell against others that are already in the business," Mr. Cunliffe said.

He said he believes affinity lending will become even more competitive. Many groups remain uncommitted, he said, and he attributed this to lender preoccupation with the refinancing boom of 1992 and 1993.

Norwest's presence will make the field even more competitive, he said. "When Norwest publicly states that we are in the business, a lot of companies will go chasing groups and try to make bids."

Norwest's new group is now handling some of the lender's previous employee relocation business. Mr. Cunliffe said the unit had gotten several calls but would not take on any new clients until it is fully operational in about three months.

He does not expect any conflicts between his affinity-lending unit and Norwest's more than 300 branches.

Mr. Cunliffe, well regarded among affinity lenders as someone who has expert knowledge of the business, was primarily responsible for creating PHH's centralized processing and closing operations, first in New Jersey and then in Denver.

Norwest asked him to join the company to do the same for it, he said. A centralized processing operation is crucial to successful affinity lending, according to industry experts.

Mr. Cunliffe co-founded US Mortgage Corp. with two others in 1978. PHH bought the company in 1984. He is the last of the founders to leave. When he departed, he said, he was very much "out of the loop" on developments at PHH. He said part of the reason was his tenure in Colorado.

Nobody at PHH could be reached for comment.

"I found this opportunity, and it was just a different kind of organization that I wanted to belong to," he said. "It's another challenge ."

Observers see Mr. Cunliffe's move as a major gain for Norwest but only a minor loss to PHH. While PHH has lost some affinity relationships recently, it has maintained its major clients, including the United Services Automobile Association, considered the nation's premier affinity group.

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