Magazine article American Banker

Top Execs Foresee Fast Changes in Lending @sh#Norwest CEO Says Retail Service Will Determine Winners, Losers

Magazine article American Banker

Top Execs Foresee Fast Changes in Lending @sh#Norwest CEO Says Retail Service Will Determine Winners, Losers

Article excerpt

INDIAN WELLS, Calif. -

The ability to tailor mortgages to customers will become the key to success in the business, the chief of Norwest Mortgage said at a conference here.

Mark Oman, chairman of and chief executive of the Des Moines-based unit of Wells Fargo & Co., said Norwest is considering such products as interest-only mortgages, portable mortgages, and seasonal mortgages as the industry shifts to "consumer-centric" from "investor-centric."

Mr. Oman, whose remarks echo those of other industry leaders, said the mortgage process of the future will involve "a lot of coaching and counseling."

In recent years mortgage lenders have tailored their products to Wall Street investors rather than to homebuyers, Mr Oman said. His company is switching to a consumer focus, he said, because the point of sale is the only place left to gain a competitive edge.

A mortgage is a "core relationship" that can be used to build other services, Mr. Oman said. The future of mortgage lending will be in "how you deliver the product," he said, citing the customer-friendly approach of Amazon.com and Domino's pizza.

Despite the new focus on the consumer, vestiges of the "investorcentric" model can still be found in lenders' use of jargon and investor acronyms such as ARM and COFI in consumer communications about loan products. "We might as well be speaking Martian to our customers," Mr. Oman said.

The secondary market has made the experience both sweet and sour for the consumer. Mortgage-backed securities lowered interest rates for customers, but consumers "paid a price in terms of inefficiency and cost," Mr. Oman said.

For mortgage banks, he said, "the key financial balance is the balance between servicing and production." Companies that exclusively originate or service loans are vulnerable when the market turns unfavorable for their line of business. …

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