bankers, but Thomas M. Garvey has made out all right. In April he was promoted to national production executive at Chase Manhattan Mortgage in Edison, N.J., in charge of all originations at the Chase Manhattan Corp. unit. Chase has jumped to the top of the origination charts, making $56.4 billion of home loans in the first half

Last month Mr. Garvey was named an executive vice president at the parent bank. He recently chatted with American Banker about Chase's strategy and the fallout from reduced volumes.

How has Chase been able to increase its market share with interest rates rising and the total origination pie shrinking?

The formula for our success is simple and straightforward. Chase has a reputation for focusing on purchase-money mortgages, and purchase loans have become a much larger percentage of the overall market, so that emphasis has paid off.

What's the mood of the origination market right now?

There have been two dramatic shifts in customers' appetites. One, this is decidedly a purchase money market. There's also been a shift in demand in favor of adjustable-rate mortgage product. That also plays into our strengths, as Chase is a large portfolio lender, so we can meet that customer demand.

Has price competition intensified?

Everyone is experiencing a significant drop in volume. In that regard, there has been significant pressure on margins caused by more subsidies going to pricing than last year. It's an industry-wide phenomenon.

For those who are smart, it will play out profitably. Smart lenders will protect their margins and do the best they can to control their fixed-cost structures and deliver excellent customer service, deepen their affinity relationships, develop joint ventures, do the sorts of things the mortgage industry is evolving towards, as opposed to focusing on traditional Mortgage Banking 101. Simply providing a low price and going after the same customer with price as opposed to service is a losing strategy.

What is chase doing to stay ahead?

We are in the process of building a new loan origination system. In addition we've made tremendous progress in our proprietary automated underwriting capabilities. We call our system ''Zippy,'' because it can quickly respond and send back to the customer an answer to their loan request. It has been deployed throughout the majority of our retail channel, and has given us quick and timely approvals for loan requests.

Has Chase laid off employees?

We have focused on our cost structure continuously. Even during the period of expanding volume, we always maintained a relationship between production and efficiency measures and staff head counts.

In times like these we have reduced our reliance on temp help and overtime and made significant reductions and cost savings there. We did not inflate our staff during the last refinance boom, and therefore have less trimming to do.

Last year the pickup in volume was not met with significant hiring of additional staff to address it. We did more work with the same number of people. This year our production numbers have changed significantly. Fortunately, since we didn't staff up, we were not put in a position where we needed to do significant layoffs to address the drop in production.?

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