Norwest Mortgage has assumed the top spot among mortgage servicers by a comfortable margin.
The Des Moines unit of Norwest Corp. leapfrogged from No. 3 on Tuesday by closing its acquisition of Prudential Home Mortgage.
The purchase, which has been in the works since late last year, increases Norwest's servicing portfolio by almost one-third and provides new areas for expansion.
"This opens up tremendously broadened opportunities for us," said Mark Korell, group president at Norwest.
Industry analysts reacted favorably. "I don't see any downside," said Anthony Davis, a mortgage analyst with Dean Witter, in New York. The companies' operations "are a nice complement" to each other, he said.
With the acquisition, Norwest added $47 billion to the $107 billion of assets it serviced at the end of 1995. The growth enabled it to displace Countrywide Credit Industries, which hae $137 billion in assets at yearend, and GE Capital Mortgage, which had $111 billion.
Executives close to the deal said Norwest paid $700 million for the Prudential unit, which was placed on the block in March. Officials at the companies declined to confirm the figure.
A number of top executives at Prudential Home Mortgage will depart. The unit's vice chairman, Larry Swedroe, and its chief executive, Marvin Moskowitz, are among those who leaving.
Most managers and other staffers will stay on. Norwest expects to cut no more than 150 of the 1,800 Prudential employees, Mr. Korell said. The acquisition also boosted Norwest's loan servicing centers from seven to nine, but Norwest plans to examine whether all are necessary.
"That's why this is such a good fit," Mr. Korell said, referring to a general lack of overlap among employees and operations.
Both companies operate retail and wholesale programs, but with different focuses. The Prudential deal also gives Norwest access to new areas.
For example, a conduit acquired in the transaction will give Norwest a new customer base and the option of securitizing loans that it used to sell as whole loans.
"We believe there are price advantages in many cases to securitizing," Mr. Korell said.
Prudential also ran a large program that helped find homes for transferred executives. This unit will bolster a similar program at Norwest, he said.