Magazine article American Banker

Company Aids Chicago Banks in Lending to Home Buyers: Midwest Mortgage Services Inc. Provide Training and Purchasing Loans from 21 Small and Medium-Sized Institutions

Magazine article American Banker

Company Aids Chicago Banks in Lending to Home Buyers: Midwest Mortgage Services Inc. Provide Training and Purchasing Loans from 21 Small and Medium-Sized Institutions

Article excerpt

CHICAGO -- Twenty-one commercial banks, ranging in size from $40 million to $600 million in assets, have begun to originate and sell home mortgage loans with the help of a mortgage banking firm that provides training and other support as well as purchases the loans from them.

"The idea of full-service banking has to include mortgage lending," said Robert R. Harring 3d, who, with Leonard Giblin, left Great Lakes Mortgage Co. five years ago to form Midwest Mortgage Services Inc. to work with small and medium-sized banks.

Mr. Harring, the company's senior vice president, notes that the changes in the financial services industry mean bankss no longer can risk sending customers to the savings and loan down the street for a mortgage..

"Twenty years ago, the savings and loan would give them the mortgage and they would come back to you for checking accounts and everything else," he said. "Now the savings and loan offers everything, so chances of getting them back are not what they used to be."

The banks Midwest Mortgage Services now serves are originating mortgages at annual volumes ranging from $6 million to $15 million. The service's most successful customer, Batavia Bank in suburban Chicago, used to send a lot of people to the local thrift for mortgages, president Bob Riley says.

"Of course, they were not such competitors in those days," he said. "Today, they're one of our big competitors. I don't want to send anybody down there."

Mr. Riley also said he felt that, by offering competitive mortgage loans, his bank could attract business from the newcomers to town. What that newcomer wants most is financing for a new home. "He doesn't much care where he gets a checking account," Mr. Riley added.

If that newcomer obtains a mortgage elsewhere, he is likely to obtain other services at the same institution and then can't be wooed anyplace else, said Mr. Riley.

Batavia Bank, located some 35 miles west of Chicago, first tried to become an active mortgage lender in 1977.

"We originated a whole bunch, but we never were able to sell any, so we buried ourselves in low-yielding mortgages," said Mr. Riley, president for 15 years of the $77 million bank.

Batavia Bank was unable to provide the proper documentation or other paperwork necessary to sell to the secondary market. But it originated and sold $4 million worth of mortgages in 1983, $9-million lasat year, and, this year, should do at least $12 million, and perhaps $16 million if interest rates stay low.

$4,000 for Program and Training

Midwest Mortgage Service sets up a mortgage program and provides a week of training in its offices for a flat fee, currently $4,000. Once lending begins, Midwest Mortgage Service collects half of the origination and servicing fees, Mr. …

Search by... Author
Show... All Results Primary Sources Peer-reviewed

Oops!

An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.