Portfolio Acceptance Corp. plays by its own rules.

That's the strategy of the Dallas subsidiary of NationsBank Corp. in trying to compete effectively against the major mortgage banks now getting into nonconforming home lending.

Gene O'Bannon, president, said in an interview that Portfolio would leverage its independence as a portfolio lender against recent entrants like CWM Mortgage Holdings Inc., Pasadena, Calif.

Earlier this month, CWM hired a top home equity lending executive to start an operation similar to Portfolio's.

Countrywide Credit Industries has a small ownership interest in CWM and the two have a number of executives in common.

In the home equity market, borrowers can tap into their real estate's equity by activating an open-ended line of credit. Lines generally have adjustable interest rates. Closed-end home equity loans are mainly fixed- rate mortgages of five- or seven-year maturities. Consultants also consider first mortgages that do not conform to the credit standards of the Federal Home Loan Mortgage Corp. and the Federal National Mortgage Association edit standards - Portfolio's business - home equity loans.

said the entrance of large mortgage banks will heat up competition in the wholesale, nonconforming-loan industry.

"When the big guys show up, the competition gets more fierce," he said.

He said Countrywide and Prudential Home Mortgage, Clayton, Mo., will sign on correspondent mortgage banks doing A-quality first mortgages to originate lesser-quality liens. And that will create more demand for those correspondent banks left unattached.

Portfolio Acceptance has an edge over the big guys because it portfolios all its loans, he said. The extra underwriting flexibility allows Portfolio to bend its rules to its customers' requests.

To combat the increased competition in wholesale home equity lending, Portfolio will expand its business rapidly over the next year, he said.

Portfolio's selling points rest on its processing speed and the certainty that it will make the loan.

He said it should buy $25 million of B- and C-quality loans a month by yearend. Last year, Portfolio bought about $200 million of loans. Its sales staff will be tripled this year, he said.

Also, the wholesaler will soon expand to the Midwest and East Coast. It currently serves the West Coast, Florida, and parts of the South.

Portfolio did shed its home improvement lending division earlier this year. "We are building a mortgage business," Mr. O'Bannon said.

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GMAC Mortgage Group continues its expansion into nonconforming home lending with the purchase of the Residential Money Centers, a Montvale, N.Y., lender.

Residential Money Centers will operate as a separate unit of GMAC Mortgage, which is based in Minneapolis. Residential's president, Bill Dacey, will remain.

GMAC sees this acquisition as an expansion of the products it can offer to those consumers with blemished credit, according to an announcement.

Earlier this month GMAC did its first securitization of home equity loans, through its Residential Funding Corp. subsidiary, Minneapolis.

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