Western Independent Bankers, a trade group for community banks, has arranged for GE Capital Mortgage Services to buy and securitize home loans originated by its 250 member banks.
The deal will be closed within days, according to a spokeswoman for the trade group.
GE will also offer the community banks a variety of residential loans - including second mortgages - for their customers.
Thus the banks can originate mortgages and sell the loans or servicing rights to GE; or they can use GE to help originate, process, and close the loans.
Robert C. Dietz, president of the Western Independent Bankers Service Corp., a wholly owned subsidiary that implements programs for the trade group, said GE was chosen because it wanted "to deal with community banks and has the demonstrated capability of dealing with community banks."
Western Independent Bankers spent six months in discussions with as many as 15 conduits before settling on GE, he said.
"We wanted somebody with deep pockets," he said.
GE Capital Mortgage Services is a division of GE Capital Mortgage Corp.
He said it was difficult to predict how much loan volume will be originated through the new program. He said the deal with GE does not set a minimum or maximum level for loan production.
A spokesman for GE said the members have a total of about 750 branches, and each branch has about $150 million in assets.
Member banks must pay monthly fees to GE to participate in the program. Mr. Dietz could not say how much each bank would pay because the charges will vary according to the member's participation.
He said that the bank association cares little about the program's loan volume. Its goal is to provide a useful service to members "rather than generating revenue for WIB," he said.
He said the cyclical nature of the mortgage business made this program especially helpful to community banks. It allows them to participate in the home lending industry without taking on much overhead cost.
Terrence O'Hara contributed to this report.