Summary
Norwest Mortgage Inc. - Servicing
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Extract
Norwest's very big piece of the pie.
Norwest is the industry's top servicer following its purchase of Prudential. The combined portfolio ended last year at roughly $148.3 billion. That's a massive piece of the servicing pie by any reckoning. But the achievement is more impressive because Norwest had to rebuild its servicing from scratch after a scrape with misfortune in 1984.
Sometimes it takes a brush with death to learn how to make the most of life. So it is for companies too. For Norwest Mortgage, Inc., of Des Moines, Iowa, the near-death experience came in 1984. The extent of the losses became public in the spring of 1985, when the company revealed it had lost $26.1 million in 1984. The 1984 loss was caused by a big write-off on losses from the pipeline hedging of $1.3 billion in ARM loans with Salomon Brothers. This pipeline loss led to a $36.8 million loss in the fourth quarter, easily erasing all the year's operating profits and creating the heavy loss for the year. This prompted the shuttering of 22 Norwest loan production offices and a sharp reduction in staffing from 3,000 to 2,200 in the fourth quarter of 1984, according to that year's annual report. Ironicall...See the full content of this document
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