Retaining customers has become a major preoccupation in the increasingly competitive mortgage servicing industry.

Speakers at the Mortgage Bankers Association's semiannual servicing conference here last week said the recent refinancing boom has put pressure on servicers to find ways to keep their customers from jumping ship-at a time when customer service is already wanting.

"Finally the servicing industry is waking up to the fact that the servicers don't own the borrowers," said David Allison, a senior vice president at Dovenmuehle Mortgage.

"But mortgage servicing as an industry trails behind other financial services," including credit cards, mutual funds, and insurance companies, in customer service, he said.

Part of the problem is the loss of the personal touch.

William Schenck, chairman and chief executive of Fleet Mortgage Group, said in a telephone interview Monday that until recently mortgage bankers rarely thought of homeowners as their customers.

A mortgage banker might think of a broker, a correspondent, a real estate agent, or Fannie Mae or Freddie Mac in that light, Mr. Schenck said, but "if you said, 'What about the individual?' they'd say, 'Oh, that's loan No. 78921-that pile of paper over there."

In the future, Mr. Schenck said, that strategy will not work.

Fleet Mortgage has invested in staff to make sure that customer service calls are answered quickly, he said, and has set up a separate phone number for customers from its private client group.

Also, a program under development will survey customers shortly after they have dealt with Fleet. That will let Fleet examine itself "on a real- time basis through our customers' eyes," Mr. Schenck said.

Many servicers see a solution to the retention problem in cross-selling- marketing financial products like mutual funds or insurance to consumers in their servicing portfolios.

"You have a great deal of information on a large number of borrowers on your portfolio," said Greg Harrington, a senior vice president at Chase Manhattan Mortgage. "You need to leverage that. The people that don't are going to lose customers when they have a refi boom or bubble hit their portfolio."

But cross-selling may not work for every product.

Sandra Lardani, a vice president at GE Capital Mortgage Services Inc., told of a focus group her company recently held. The mostly affluent consumers interviewed were "not interested in a mortgage company providing investment products," she said. "They want someone they know and trust" to sell them annuities and mutual funds and other financial products.

Homeowner-related services like computer insurance or appliance warranties might be a good cross-selling fit for mortgage servicers, Mr. Harrington suggested.

Fleet, though preoccupied with handling the huge volume of the current refinancing boom, plans to expand its cross-selling program next year, Mr. Schenck said. Cross-selling will be "a big focus for us in 1999," he said. "We make a good revenue from our cross-selling business, but it can be substantially higher than it is."

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