Riding a supercharged market for home loans, the industry giant Norwest Mortgage has already topped its origination volume for all of 1997.

According to figures due for release today, the company funded $56.04 billion of new mortgage loans in the first seven months of the year. It originated $55.3 billion last year.

The growth came with the mortgage industry on course for a record- breaking $1.2 trillion of originations, according to the Mortgage Bankers Association. And Norwest, in an indication of the advantage of scale in the mortgage business, has outpaced the industry, increasing its share of the origination market to 7.4% from 6.5% at yearend.

"All the key drivers have lined up," said Mark Oman, chief executive officer at Norwest Mortgage. A strong economy and high consumer confidence have made for a robust housing market, while falling interest rates sparked a refinance boom.

The company started the year with relatively modest ambitions.

"Our plan was to grow off last year's volume," said Mr. Oman, who was reluctant to project the company's 1998 volume.

Around January, when refinancings began to pick up, the company expected to fund $60 billion to $70 billion this year, he recalled.

Now it is clear that Norwest will "do noticeably more than the $70 billion or so they had earlier thought was their capacity," said Ben Crabtree, an analyst at Dain Rauscher Wessels.

Norwest has been able to handle the flood of volume without much backlog, Mr. Oman said. Investments the company made in systems and process reengineering "have helped us manage volumes we couldn't have managed even a year ago," he said.

This year the company stepped up its use of proprietary automated credit scoring tools, allowing loan officers to make credit decisions faster, Mr. Oman said. Norwest has also speeded up the process of reviewing loans after closing, he added.

The company is also getting more productivity from its staff. During the 1993 refinance boom, for every sales representative Norwest employed 1.25 people to process and close loans. Today it employs less than two-thirds of a back-office worker per sales rep.

As the largest originator and servicer of residential mortgages, Norwest enjoys economies of scale. But it does not rely on them alone, Mr. Oman said.

"This is still a people business," he said. The cornerstone of Norwest's strategy is to have its retail stores act as profit centers, so the employees there act like owners, but at the same time to enjoy the benefits of scale that come from being a big player, he said.

"We want to out-local the nationals that manage from an ivory tower and out-national the locals."

The eye-popping volume Norwest and others have achieved this year is not sustainable, industry observers said.

"Refinance activity has been a significant catalyst to the production boom," said George Bicher, an analyst at BT Alex. Brown. "It has to ebb at some point. Even if rates stay low, the people who were going to refinanced have refinanced."

Next year the Mortgage Bankers Association expects originations to drop to $840 billion, said MBA economist Brian Carey.

The pending merger of the parent bank with Wells Fargo should help Norwest Mortgage "manage the decline in refis," Mr. Bicher said. "Tapping deeper into the California market should help them get more market share."

Preparing for the merger, which is expected to close in the fourth quarter, has added to Norwest Mortgage's work load.

"We are doing so much business that we don't have lots of extra capacity around, and we're having to build capacity," said Mr. Oman. "We need to be appropriately staffed and supportive of volume."

The rate at which Norwest has originated loans this year begs the question: Will the company hit the $100 billion mark this year?

Mr. Oman says he'd be "surprised." For one thing, he said, most of Norwest's volume is purchase loans, not refinancings, and consumers like to be moved into their homes before school starts in the fall.

Moreover, there's no guarantee that these conditions will last. "Rates can turn either way fairly quickly and have a big impact."

But Ed Elanjian, a managing director at Cohane Rafferty Securities, likened a $100 billion origination year to the four-minute mile.

"We always thought it could never be broken," he said. "Eventually it will be-and if it's going to happen in the foreseeable future, this is the year."

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