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Special Reports
Construction Lending: Building
the Foundation
Palm Coast Lender Offers Construction-Perm
By Jennifer Harmon
ST. AUGUSTINE, FL -- Prime Home Mortgage has outlived the first mortgage it funded
more than 30 years ago. And like a mature homeowner, the company is "adding a room" with a new office
in Georgia.
Founded in 1973 as part of the original ITT Financial of Palm Coast, Fla., the
company has grown to become one of northeast Florida's top lenders. Its longevity is unusual in an industry prone
to rapid expansions and contractions, said Chriss Spires, president of Prime Home Mortgage.
"With low rates and increased homebuilding, I've seen a lot of new mortgage
companies spring up," Mr. Spires said. "But our borrowers know we've been here through good times and
bad, and most importantly, we've shown we're here to stay."
Mr. Spires, who has been in the mortgage business for 20 years, started with Prime
Home Mortgage in 1999. He said the company took off in 2000 after he and his partner set out to develop a more
in-depth growth plan. "The company had such a good, rich tradition doing business in Palm Coast," he
said.
"Our goal is to grow the company organically. It makes us easier to branch
out that way. We're taking care of our employees. We're not looking to acquire other companies. We're taking baby
steps by expanding with an office in Georgia, reinvesting into the company." Located in Macon, Ga., the office
will specialize in wholesale lending to community banks and credit unions.
Prime Home Mortgage offers the complete range of mortgage services including construction
financing, lot loans, investment property and second-home programs. The company provides conventional and jumbo
loans. Approximately half of its business is construction-perm business. Of that, Prime Home Mortgage funds a large
part from its own credit facility.
"We have gone after a pretty narrow target of borrowers. We don't do government
loans or subprime loans," Mr. Spires said.
"We're unusual compared to most mortgage bankers in that through our credit
line, we fund construction loans and we're not a bank. As a mortgage company, we use similar lines to fund construction
loans."
The construction lending side of the business is growing rapidly, especially with
the amount of new construction in Florida and throughout the Southeast.
Currently, the company is funding $38 million to $40 million for homes under some
phase of construction, many of which will be completed within three to 12 months.
"The builders we serve like our style of lending, because we take a real
hands-on approach. We draw the loan, have it ready and they come by and pick it up.
"We don't have all the constraints a large bank would have with doing this
type of lending.
"Our business model works for us. We've all seen mortgage companies and mortgage
banking companies have a lot of volume and not make any money," he said.
As interest rates begin to rise, the overall fear in the business is that refinances
will go away. Higher rates do not translate to "doom and gloom" for the industry, according to Mr. Spires.
"If fact, we think just the opposite. It's an indicator the economy is doing
better. It means more people are working. People are making more money. Raises are occurring as companies grow.
So far, the slight increase in interest rates has not impacted the home building
sector of the company's business. Almost 70% of Prime Home Mortgage's business is made up of new home construction
loans and buying existing homes, while 30% include refinancings.
"When people decide they want to build a house, their mind is made up. If
rates are 5.5% or 6.5%, they are still going to build a house," he said.
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