PHH US Mortgage Corp., one of the nation's largest originators of home loans, is partnering with credit card specialist First USA Inc. to market a credit card that people can use to shop for a home.

First USA, Dallas, has begun to issue the card to some mortgage applicants. PHH will approve, close, and service the loans, in effect enabling cardholders to lock in a loan rate before choosing a home.

PHH's specialty is in affinity lending-originating mortgages for specific groups of customers, such as trade organizations and professional associations. Mount Laurel, N.J.-based PHH originated $8.3 billion in loans last year, ranking it No. 13.

Through the program, customers can call a toll-free number to apply for a mortgage. If the borrower is approved for a loan, in an amount determined by credit history and other underwriting criteria, a HomePurchase Card is sent out. The borrower can use it when shopping for a home.

The advent of this and other loan programs in which customers are pre- approved for mortgages is a sign of the "intensified battle" for loan volume, according to Weston Edwards, whose company does studies of real estate agents and brokers.

First USA is expected to begin issuing pre-approved cards within 60 days.

Butch Stine, a First USA vice president in charge of the program, said the customer can lock in a mortgage rate with the card and then take up to six months to buy. Customers also can get discounts on moving and storage by using PHH's relocation subsidiary.

Once the loan has been approved, Mr. Stine said, the customer will be steered toward a "preferred real estate network."

Industry observers said this could be a boon for PHH's new parent, HFS Inc. HFS completed its acquisition of PHH last week.

HFS is the franchise owner of real estate brokerage chains Century 21, Coldwell Banker, and ERA Realty. They have more than 8,500 real estate offices nationwide.

Mr. Stine didn't elaborate on whether "the preferred real estate network," meant HFS' stable of real estate offices.

But Mr. Edwards, a consultant based in Laguna Beach, Calif., said the program could enable PHH to send more leads to HFS, which sells about one out of every five homes through its real estate agencies.

Earlier this year, HFS gained complete control of a program that had been run by PNC Mortgage Corp., originating loans through Coldwell Banker offices. HFS bought PNC's stake in the venture and PHH is now running the program.

Mr. Stine said statement stuffers advertising the HomePurchase Card would be sent to all of First USA's 16.3 cardholders, while direct mail advertisements will be sent to First USA cardholders who do not own a home.

Although PHH is the only source of mortgage financing for the program currently, Mr. Stine did not rule out the possibility of First USA's working with other lenders in the future.

"At one point, we could cobrand the card with other lenders," he said. For now, the HomePurchase Card will only have the First USA brand name on it.

First USA itself is in the process of being acquired. Banc One Corp. announced in January that it was purchasing First USA. Banc One's mortgage unit originated $3.3 billion in mortgages last year.

The company has experience working with mortgage lenders. It has been marketing credit cards to customers of three mortgage lenders: Knutson Mortgage Corp., Capstead Mortgage Corp., and Countrywide Credit Industries.

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