Retail growth spurt

Mortgage Banking, May, 2002 by Charlyne H. McWilliams

Principal Residential saw a 17 percent increase in its number of loan originators in 2001. And even with a projected level market for 2002, Catalfo says her company will increase its number of loan officers by between 15 percent and 20 percent.

Catalfo attributes her company's ability to add loan originators to industry mergers and Principal Residential's competitive compensation package. An additional attraction to Principal Residential, she adds, is the company's decentralized retail business model, which features loan processing and closing at the branch level with automated underwriting.

"Some loan originators are uncomfortable with the centralized model because they are just one of many," she says. "The decisions are made without understanding the market they are trying to serve or the nuances of that market."

Because of the high level of origination last year, Catalfo says there was very little channel conflict. Her company has retail, wholesale, correspondent and call-center/Internet divisions. To eliminate conflict, Principal Residential identified specific markets for each channel, she says.

"We made a conscious decision to direct inquiries to branches where there was [a branch] and to the Internet where there wasn't a branch," she says. "But ultimately, we let consumers choose how they want to do business."

Wells Fargo Home Mortgage

Cara Heiden, executive vice president of national consumer lending at Wells Fargo Home Mortgage, Des Moines, Iowa, says Wells Fargo plans to increase its market share and projects the same level of retail origination this year as it had during 2001, which was $100.09 billion. According to the company's numbers, Wells Fargo had 4.8 percent of the mortgage market in 2001.

"Going into this year, we plan to keep our head down and grow our market share and service our current customers," Heiden says.

To increase its market share, Wells Fargo plans to focus on the continued growth of its loan origination sales force even more than it did in 2001. The lending division started with a sales force of 4,500 last year and increased that to 6,333 by the end of the year. Wells Fargo's goal is to increase to 10,000 loan originators in the next three years, Heiden says.

The company has developed a process for recruiting loan originators (who they refer to as home mortgage consultants, or HMCs), which focuses on "high-trust sales and marketing," says Heiden.

At the core of developing this strategy, Heiden says, is making sure that HMCs maintain and continue to develop "deep relationships with referral sources, such as Realtors, bankers, builders and financial advisers.

"We are hugely committed to our retail business," Heiden says. "As we make our HMCs more successful and more productive, we're servicing more customers and becoming more successful as a retail group.

Heiden says Wells Fargo provides its HMCs with the point-of-sale automation and marketing support and training they need to be successful. The training includes providing best-practice examples to the HMC as well as teaching him or her how to conduct research and interview business resources. The training also includes coaching from management.