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A different kind of mortgage company built around telemarketing and a dedicated army of telephone counselors to forge personalized mortgages for relocating employees is posting impressive results. PHH US Mortgage Corporation, Cherry Hill, New Jersey, is one of a new breed of mortgage bankers whose distribution channels are unique.

The special management approach needed to guide such a different mortgage entity to steady growth and profitability offers some interesting insights for those considering venturing into new pastures for mortgage customers. We interviewed H. Robert Nagel, president, PHH US Mortgage, and got an interesting look at the special staffing needs and structure built into a company whose whole image is conveyed over the phone.

Nagel said, first of all, the best profile for potential candidates to staff his complement of counselors - the only people allowed to talk to the customer - is a bank teller. The reason they make top candidates, he said, is because they typically have good verbal skills, tend to have a hard job that carries a lack of recognition inside the bank, and they tend to be underpaid. Counselors get continual evaluation based on the service they offer to the customers they handle. The company uses counselors as processors and to act as the sole contact between the mortgage company and the borrower. So, the closing department must advise the counselor first to schedule the closing date with the borrower. The counselor also is the only contact with the real estate broker hired to sell the relocating employee's old home.

Nagel said because superior personal service is so important, given his company's strategic niche, they decided to focus on hiring employees with the right personality and phone ability, rather than routinely hiring processors with technical knowledge of the business. The company counts on training its new hires on the technical aspects of the business. Also, he said, PHH US Mortgage decided against necessarily hiring experienced processors as counselors, because those employees are "used to handling paper - when the phone rings that's [regarded as] an interruption."

This total reliance on telemarketing imposes some other unique demands on the staff. These counselors are trained to "be aware of East Coast time constraints" if they are assigned to a relocating employee based currently on the West Coast. The mortgage company originates in 50 states and takes applications, processes and closes loans all out of one central location in New Jersey.

PHH US Mortgage does the great bulk of its business by serving the mortgage banking needs of corporations that routinely transfer many employees and by offering mortgage and property resale services to affinity groups. PHH has an entire family of related companies under its Relocation and Real Estate Management Services division that enable its mortgage operation to truly customize the real estate services it can offer relocating business people. A sister company, PHH Homequity, for example, buys as many as 30,000 homes a year from relocating employees and then uses its established network of appraisers and Realtors to resell the properties at a later date.

This complete service capability has enabled the PHH Relocation and Real Estate Management Services division to sign up some major companies as customers.

PHH Corporation's 1990 annual report virtually glows with praise about the growth posted by its mortgage banking subsidiary. "PHH US Mortgage Corporation continued its outstanding performance during FY 1990. Mortgage closing rose by 118 percent and our mortgage servicing portfolio had reached $3.4 billion by the end of the fiscal year. We fully expect this operation, now one of the fastest growing mortgage banking companies in the country, to continue its record-setting pace...." The servicing portfolio's size by the end of the FY 1990 period is double what it was at the end of FY 1989.

PHH Homequity - as the relocation arm is called - boasts a 97 percent client satisfaction rating, according to the report.

So, how do you build a mortgage lending operation that complements a division devoted to customized, top drawer service, without going overboard on underwriting accomodations and things that jeopardize credit judgments? First, you make the most of the things you know about property values in markets around the country that you have gathered from a history of being in the relocation business. The relocation unit - PHH Homequity - also keeps a data base on appraisers that carries performance ratings. The mortgage company is on-live with that data base to make sure the appraised value of the house being bought is likely to be the best estimate of what that house is worth.

Also, PHH's other operations have first-hand knowledge of the particulars of corporate moving policies that apply to relocating employees. PHH can advance amounts to cover reimbursable moving expenses to borrowers, Nagel said. The mortgage company also figures out what a likely cost-of-living adjustment to the salary of the transfered employee will be, and that is factored into the underwriting. PHH US Mortgage also credit 75 percent of the "trailing spouse's" income before that spouse actually lands a new job. Nagel says the operation can also be "very tolerant" of missing documents at closing.

Nagel says his unit literally "tailor fits the customer to the mortgage." PHH finds out the neighborhood and the house that the relocated employee wants and then "works the ratios backward" to make the mortgage workable. What does all this mean for the delinquency rate on the growing servicing portfolio? Currently, the delinquency rate is below 2 percent.

This unique approach has another thing going for it - no branch overhead and no servicing-released premiums. Nagel said about a year ago that his cost of origination was a little more than 100 basis points. Furthermore, the quickly approaching $4 billion servicing portfolio is being constructed from all in-house originations. The single location in Cherry Hill was expanded by 30,000 square feet in the past fiscal year to accommodate a growing workforce, which is heavily female. The staff currently numbers 400.

The mortgage and relocation operations boast some ties to some of the country's more upstanding borrowers. Among the more recent customers is the Pentagon Federal Credit Union, Nagel said. Some other clients include: the FBI, the IRS, the Drug Enforcement Administration, civilian Air Force and Navy employees and the General Accounting Office.

Even though others in the business have taken to the phones to bring in originations, Nagel says PHH US Mortgage was "the first to take applications over the phone."
COPYRIGHT 1990 Mortgage Bankers Association of America
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1990 Gale, Cengage Learning. All rights reserved.

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Title Annotation:PHH US Mortgage Corp., one of a new breed of mortgage bankers
Author:Hewitt, Janet Reilley
Publication:Mortgage Banking
Article Type:company profile
Date:Sep 1, 1990
Previous Article:Economic trends.
Next Article:Servicing's great divide.

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