In Outsourcing Deal, PHH Retains Metlife As Client ■BY JODY SHENN Insurance Agents and Instead of Robbing PHH Other Sales Representatives Mortgage Corp

THE FINANCIAL SERVICES DAILY Friday, October 14, 2005

MORTGAGES In Outsourcing Deal, PHH Retains MetLife as Client ■BY JODY SHENN insurance agents and Instead of robbing PHH other sales representatives Mortgage Corp. of a sizable in major markets, Ms. referral source, MetLife Inc.’s DeMaio said. It also desire to get into mortgages has expects to hire some loan actually resulted in an expanded officers elsewhere and relationship between the two. make them responsible for The three-year outsourcing several offices. The hirings deal that the companies signed will be made on both last month is the first significant coasts, and in big cities in private-label deal for the Mt. between them. Laurel, N.J., mortgage out- MetLife expects the sourcer since Cendant Corp. plan, which it began for- spun off the mortgage business mulating two years ago, to and a fleet management busi- give it a fully developed ness as PHH Corp. in January. Partnerships: DeMaio, left, says MetLife is using PHH as “our back office.” Fuller says the outsourcer has letters of intent with several other companies. sales staff by 2007, she said. Last week MetLife took its The mortgages will be first handful of mortgage appli- business line, MetLife Bank hired PHH for funded by MetLife, which cations and began “using PHH as our back several types of mortgage outsourcing will keep some and sell others through office,” Donnalee DeMaio, the president of work. PHH, which will service all the loans under MetLife Bank of Bridgewater,N.J.,said in an MetLife’s loan officers will use PHH- the MetLife name. “It was critical to us, in interview this week. developed point-of-sale software on their selling the loans, that we don’t sell the [cus- In August, Ms. DeMaio began to talk laptops, and PHH employees will do all the tomer] relationship,”Ms. DeMaio said. publicly about an 18-month plan to offer processing work on a private-label basis. At one point MetLife had considered hir- home loans through bank loan officers in (The bank’s salespeople will remain ing its own staff to do processing work, she MetLife’s field offices, as well as through involved with customers after the handoff said,but it decided against doing so,because direct sales channels. for processing, Ms. DeMaio stressed.) PHH it wanted to avoid adding fixed costs, and “it For the previous two years PHH had will also take clients’ applications directly, takes a lot to build an infrastructure to pro- been taking telephone and online mortgage through a call center and a Web site, both of vide the level” of customer service that it applications from MetLife customers in a which will carry the MetLife brand. would require. cobranded program, and MetLife’s ambi- MetLife is already doing a small amount “Protecting MetLife’s name”was a big con- tions appeared to hurt PHH, which had of advertising for its mortgage line, she said. sideration, she said. MetLife talked with five been funding the loans. As part of its plan, MetLife recently start- companies — three seriously, and none of However, to support its move into a new ed hiring loan officers to work alongside its which it worries about as a competitive threat — before choosing PHH to do the back- tougher to sign up clients. (Before loans for them, from CUNA Mutual office and direct sales outsourcing, she said. announcing the spinoff plan, Cendant Group. “They have an excellent reputation for acknowledged that it was in talks with MetLife entered the banking business in service to their customers, and that’s some- someone.) 2001, when it bought New Jersey’s Grand thing that’s very important to us,” Ms. But in quarterly calls the executives have Bank of Kingston, which had one branch DeMaio said. Like other deals with PHH, also repeatedly claimed they have been and assets of $80 million.(MetLife Bank still MetLife’s agreement requires the outsourcer making progress in talks with potential cus- has only one branch.) to maintain certain service levels in areas tomers. It has kept its staff and space in Ms. DeMaio said again this week that such as responsiveness, she said.“It’s impor- offices to allow for new relationships, MetLife’s goals in mortgages are to take tant to us how long somebody has to wait though the expenses have hurt earnings. advantage of cross-selling opportunities for an answer.” In the interview, Sharon Fuller, a senior and build broader retail banking relation- PHH does mortgage work for several vice president at PHH Mortgage, said it that ships with consumers. In August she men- other big financial services companies, has gotten as far as letters of intent with sev- tioned a desire to acquire variable-rate assets including American Express Co., Merrill eral other possible clients, but it is still work- to be funded from the bank’s deposit base. Lynch & Co., Charles Schwab Corp., Amer- ing through long sales cycles. Homeowner’s insurance would be a ican International Group Inc., Mellon “We’re pretty excited about the direction “natural” cross-sell, Ms. DeMaio said. Also, Financial Corp., Independence Communi- that we’re going,” she said. “There’s a lot of “because buying a house is really a life ty Bank Corp., and Northern Trust Corp. activity.” event,” sales of unrelated products, such as This year PHH executives have said that This month PHH announced that it had life insurance, look promising. uncertainty about its status last year, when signed a letter of intent to buy the assets of “There’s a lot of other financial planning rumors circulated about a possible sale to CUNA Mortgage Group,which works with that can go around buying your first home,” Countrywide Financial Corp., made it credit unions and services $10 billion of she said. ■