Bank America Corp. recently promoted its top mortgage portfolio and secondary marketing executive, Claus Lund, to executive vice president.

In an interview last week, Mr. Lund said he saw his December promotion as a sign that the bank sees the active management of its mortgage portfolio as key to boosting the profitability of its home loan business.

Before joining BankAmerica in 1992, Mr. Lund was director of mortgage- backed securities with SunAmerica Financial, Los Angeles.

A native of Denmark who once taught philology-the study of language as used in literature-at the University of Iceland, the 46-year-old executive also described his unusual pursuits outside the office.


How has the management of mortgage portfolios changed?

LUND: I think it's becoming a lot more important. Many banks tend to originate loans and put them into portfolio, and take them out every quarter and dust them off and say 'Did they go delinquent or not? Should we increase the reserve or not?'

I implemented a "loan level profitability analysis" system so we literally could look at all the loans in the portfolio and determine the individual profitability of those loans.

We go back five, six, or seven years, (and) we compute the actual value of each individual loan.

And you feed these results back into the origination side?

LUND: Absolutely. That's exactly what we've been doing. We realized that certain loan types were not profitable because they didn't stay on our books long enough. That was one of the drivers behind the prepayment option on our loans.

Then we've taken defensive steps, like changing our loan programs, changing our pricing. And sometimes we have disposed of certain asset types because they didn't fit in with our overall portfolio.

What are profitable loans for you?

LUND: I'll give you a very general answer. Profitable loans are those loans that don't go bad and that stay on the books.

How did you switch from philology to business?

LUND: Philology is a better hobby than a profession. I tend to read old Norse sagas in old Icelandic.

Do you like to garden?

LUND: I go dog-sledding. The last two years I've been going to the very northern part of Greenland. It's great fun.

You usually have 15 to 18 dogs. Very weird dogs. They're very fierce.

People always say 'What if the weather gets bad?' Well, you stop the dog sled, head down into the snow, and you sleep for a day or two.

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