Wells Fargo's latest mortgage loan product, the Home Asset Management Account, combines a mortgage and a home equity line of credit into a single account.
The line of credit varies based upon the accountholder's equity stake in the underlying asset, the home. As a result, accountholders need not refinance in order to take advantage of rising property values, lower interest rates or the tax-advantaged status of mortgage interest payments.
In many respects, it's similar to the current account mortgage concept that banks in the U.K. have offered since 1996. ("Banks Mulling New Product Ideas" Bank Systems & Technology, Feb. 2002)
But U.K.-based efforts along these lines did not serve as the main inspiration for the project, according to one of the project leaders at Wells Fargo. "We're trying to figure out ways that we can deliver products and services that make it easier for consumers, and to benefit consumers in their lives or in managing any aspect of their financial portfolio," said Brad Goedken, senior vice president at Wells Fargo Services Company. "The home is a big part of that."
"We really didn't look at anybody else's model," added Goedken.
The combination account incorporates processes and systems from both the Wells Fargo Consumer Credit Group, based in San Francisco, and Wells Fargo Home Mortgage, in Des Moines, Iowa. "There was a tremendous amount of collaboration between our home equity company and the mortgage company within Wells Fargo, to look at the operational processes, the people across both those business units, and the technology," said Goedken.
Given the innovative nature of the product in the U.S. market, Wells Fargo wasn't able to rely upon off-the-shelf systems to meet the business requirements for the new product. Furthermore, sources say that some implementations of the current account mortgage in the U.K. still require manual reconciliation between the various systems of record by bank operations staff. That's hardly a model to emulate.
So, in an effort drawing upon existing systems, middleware infrastructure and data repositories, Wells Fargo developed an in-house solution.
Regulatory and compliance issues were foremost considerations from the start. "Naturally as we integrated the capabilities together, our solution needed to satisfy any and all of the federal and state compliance and regulatory requirements, across many of the types of products, and we satisfied that by integrating it into the system," said Goedkin.
Goedkin also said that Wells Fargo is working through the patent process regarding certain aspects of the new system.
The Home Asset Management Account is available through Wells Fargo Home Mortgage retail offices, including Wells Fargo banks outside of Texas, and at over 1,600 mortgage stores. "People are enthusiastically grabbing hold of it," said Goedkin.