Banks of all sizes are teaming up with former rivals to take advantage of the high returns from the subprime home equity lending sector.

The well-attended Consumer Bankers Association annual home equity lending conference here earlier this week stressed these unlikely partnerships by featuring representatives from Ford Consumer Finance Co., Dallas, a nonbranch real estate lending unit of home equity giant Associates First Capital Corp.

"It's devastating to your relationship if a customer needs a loan and you can't provide it," Debbie L. Rosen, the new president of Ford Consumer Finance, told bankers in a presentation on the future of the home equity market.

Bankers used to dismiss finance companies as marginal competitors. But partnership with them is becoming more popular as competition for market share increases in the home equity business. Securitization techniques, initial public offerings, and improved technology and marketing have allowed finance companies to grow exponentially in recent years. Many are now even soliciting prime bank home equity customers to boost business.

A finance company like Ford Consumer Finance might not have been welcomed by association members a few years ago, said conference chairwoman Carlotta O. Willard, director of consumer loans at Norwest Corp., Minneapolis. But she said bankers realize that times have changed.

This year, for the first time, the association's board of directors included a finance company representative, Sharon M. Michnuk, senior vice president at Ford Consumer Finance. Ms. Michnuk heads Ford's bank partnership program.

Ford Consumer Finance has a $9 billion portfolio of home equity and first mortgage loans, predominantly made to consumers with credit problems.

Its three-year-old partnership program has an increasing number of bank participants that range in size from nationwide banks to those with operations in a single state.

The banks hand off customers who don't qualify for traditional mortgage loans to Ford Consumer Finance, which makes and services their loans.

"We're beginning to play together well," Ms. Rosen said.

But not everyone is on board with the bank-finance company partnerships. "Joint ventures and reject pass-through programs have still been relatively unsuccessful," said Rodney Bahr, senior manager at KPMG Peat Marwick, St. Louis. Most partnerships are having trouble streamlining the handoff process, he told subprime lenders during a conference on the subject last week.

Ms. Rosen's promotion, which took effect Sept. 26, makes her the highest-ranking female executive in subprime home equity. The move represents a restructuring at Associates First Capital, a giant in nonbank home equity lending. She succeeds Dan Fowler, who has been named president of Associates' 1,700 branch system.

Several representatives from Money Store also attended the conference. The Union, N.J.-based company also partners with banks to provide loans to customers with damaged credit histories.

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