In the mortgage business, Mark Oman already had the biggest house on the block. Now he's planning to add a wing.

As chairman and chief executive officer of Norwest Mortgage, Mr. Oman runs the largest originator and servicer of residential mortgages in the country. This week his company's parent, Norwest Corp., announced plans to merge with Wells Fargo & Co. - a move that is likely to increase the Des Moines-based mortgage company's dominance.

"The opportunity is there to serve millions of customers of Wells Fargo," Mr. Oman said in a telephone interview. "It's an opportunity we didn't have before to really leverage their name and presence in high- growth states where Norwest does not have banking locations."

Wells Fargo has banks in five states where Norwest does not: Washington, Oregon, Idaho, Utah, and California.

"Anytime you have depository institutions, you get a lot of brand recognition in those markets, and that helps mortgage originations," Mr. Oman said. "The Wells Fargo brand is an even more powerful financial services brand that can help us in our nonbank markets."

Norwest has 2.1 million servicing customers, and "a few hundred thousand of those are in states where Norwest didn't have banks and Wells Fargo does have banks," Mr. Oman said. "So there's an opportunity to try to cross-sell other products."

But the company faces challenges almost as big as the opportunities.

"An enormous amount of training and blending" will be required to get Wells in sync with Norwest's mortgage effort, said Ben Crabtree, a banking analyst at Dain Rauscher Wessels.

"We haven't even mapped where all the overlap is yet," Mr. Oman conceded. "There's an opportunity to move originators into the banks and grow our sales force, but it takes a while to do it.

"Mortgage banking is still a people business. You need to pay attention to the quality of the people and of customer service. To the degree that we're adding new sales force, we're going to take our time."

And it remains to be seen how effectively Norwest's mortgages can be marketed through Wells' branch system.

In 1995 Norwest and Wells formed a joint venture to originate mortgages, but it was scrapped because the volumes of production fell short of "our mutual goals," Mr. Oman said.

At the time, Norwest said that Wells' supermarket branches, which now account for 922 of its 1,930 outlets, were not the best channel for mortgage lending.

But "working as one organization, we might find an opportunity to leverage supermarket locations" better, said Pete Wissinger, managing director of consumer lending and servicing at Norwest Mortgage.

Under the short-lived arrangement, Norwest's ability to cross-sell to Wells customers was limited, a Wells spokesman said, because Norwest did not have any banking presence in California-a situation the merger could remedy.

Mortgages and supermarkets are not incompatible, but Norwest would have to carry out its program properly, said Douglas Ferris, chairman of National Commerce Bank Services Inc., a consulting subsidiary of National Commerce Bancorp in Memphis.

Marketing such products in supermarket branches requires adequate staff, training, and technology to make sure that employees are not so overwhelmed with checking transactions that they do not have time to spend with mortgage customers, Mr. Ferris said.

Also, the branches would have to be designed properly. "You have to have enough space to be able to sit down and communicate with someone," he said. Branches of 200 to 500 square feet have proven adequate, he said.

After the joint venture ended last year, PHH Mortgage, a subsidiary of Cendant Corp., took over originating mortgages on Wells' behalf. But Wells continued to refer private banking clients who needed mortgages to Norwest. Those referrals have generated just under $230 million of originations this year.

Mr. Oman said Norwest hopes to take over the mortgage business PHH has been handling. "Wells Fargo will have to deal with their relationship with PHH," he added.

Mr. Oman did not know how much origination volume the PHH-Wells partnership has generated but said, "The opportunity there is very significant. At Norwest, we do tremendous referral volume back and forth both ways between the banks and the mortgage company."

Officials at PHH and Wells Fargo would not disclose how much volume their program has seen, or when their contract is to expire. But analysts agreed that if Norwest took back the California business, it would be a significant addition.

Had the merger deal come just a little bit earlier, it might also have given Norwest an opportunity to expand its already huge servicing portfolio, which totaled $211.8 billion at the end of the first quarter. The announcement came little more than a week after Wells Fargo closed the sale of its $28 billion servicing portfolio to GMAC Mortgage.

Overall, industry experts are bullish about the mortgage company's post- merger prospects. "This is a very, very positive development" for Norwest Mortgage because of the access it will give to Wells customers, said Mr. Crabtree.

"It's undeniable that it's got to get bigger," said Gary Gordon, analyst at PaineWebber. "It wouldn't seem to be hard to generate $2 billion to $4 billion through their branches, considering Wells' reach. If you're a competing lender in California, you've almost certainly lost a little business."

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