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Special Reports
FHA Lending
FHA Stars in Small but Growing Firm's TV Move
By Bonnie Sinnock
Lend America here is a private mortgage company known for its 30-minute television
spots focused on Federal Housing Administration programs. While it has been a relatively small player, it is notable
because it has done relatively well in challenging times.
Like others who had the fortune to be primarily focused on government or government-sponsored enterprise product
when the current market crisis hit, it has been able to differentiate itself in part because it had relatively
little to do with the subprime/nonconforming loan problems that have proved fatal for so many firms.
Lend America has been relatively nimble when it comes to adjusting to the market's recent dramatic shift, moving
into the government niche in the nick of time, chief business strategist Michael Ashley said. "Seeing this
change coming is really what put us on the map. We were exiting the market that imploded," he said. "We
lost money. We took a hit. There's no question that if it had happened a year earlier we wouldn't have survived."
The company has done some work with mortgage brokers and recently agreed to purchase one, Hauppauge, N.Y.-based
The Mortgage Zone. Mr. Ashley would not discuss financial details of the transaction and neither would Alan Breeker,
chief executive officer of The Mortgage Zone. Mr. Breeker said in an e-mail response to questions from this publication
that the acquisition was attractive to him because of the strong growth prospects for the Federal Housing Administration
products Lend America specializes in "as well as the appearance that mortgage brokers are being squeezed out
of the picture. "I spent many years building Mortgage Zone into a successful company into a successful company
of over 500 loan officers and I wanted to make sure I protected them and the integrity of the organization. Once
I decided our company needed to be able to offer FHA financing and the stability of the company was dependent upon
a banking platform, I set out to find the right entity to join forces with. After interviewing many companies and
getting an inside and outside look, Lend America stood out in terms of its entire nationwide operating model,"
Mr. Breeker said, adding that, "The benefits of joining Lend America [included] a 32-state mortgage banking
platform with the single best marketing I have seen to date for FHA clients. "Furthermore, the company is
thriving with upward momentum where others are treading water or worse. I wanted to position our loan officers
and clients to take advantage of the same model that's fueled Lend America's success during these difficult times,"
he said.
In addition to its acquisition of The Mortgage Zone, growth strategies Lend America was eyeing at press time included
the careful establishment of a branch channel. To date, Lend America primarily has been a direct-to-consumer residential
mortgage lender. The company's main retail unit originates using an advice-driven marketing campaign that highlights
the benefits of government loans using relatively low-cost media such as television. It avoids brick-and-mortar
branch costs by operating in 30 states nationwide from one central 41,000-square-foot facility. Lend America's
originations at press time had been focused on the adjustable-rate mortgage refinance sector, particularly within
the Federal Housing Administration where reform efforts are underway. The company has been running 30-minute television
spots in select markets to reach prospective borrowers in this niche, said Mr. Ashley, who is appears in the company's
television broadcasts. Complementing Lend America's television outreach is its toll-free phone number 1-800-FHA-FIXED,
which it bought over a year and a half ago and has found to be very effective. The combination has "generated
a lot of phone calls" to the company, Mr. Ashley said. Going forward, Mr. Ashley said Lend America wants to
position itself to tap originations in the purchase market. The company has gotten a toll-free number referencing
the government's purchase/rehabilitation program (1-800-FHA-203K) to that end. Mr. Ashley anticipates that the
high number of foreclosures on the market will need restoration, make that program popular and the company at press
time was contemplating working with foreclosure companies to address this market. The Lend America executive's
prediction is that 2008's market will be characterized by "70% purchases and 4% interest rates. "We're
going to see that instead of speculators making a profit selling homes," he said.
So far Mr. Ashley's strategies appear to be paying off. While other industry players have seen massive layoffs,
his company is "hiring people every day," he said. At press time it had 380 employees locally, up from
350 a couple months previous (not including The Mortgage Zone LOs.) In New York State, in particular, Mr. Ashley
notes that the company has been relatively active "hiring people" because its low-cost model and the
shortage of positions for industry talent allows it to. He said the company has hired former staff from at least
two now-defunct former industry giants, Melville's American Home Mortgage and New Century. In addition, the company
has hired some of those laid off from Wall Street firm Deutsche Bank's MortgageIT unit. "There are so many
quality people out of a job," Mr. Ashley said. Lend America has been willing and able to hire some, but only
those it feels best match its needs. "We can be pretty selective in our recruiting process," chief marketing
officer Mary McPhail said.
While aggressive in some ways the Lend America executives are cautious in others, all too aware of how quickly
secondary market, regulatory or reputational risk can hurt a growth-oriented firm. Mr. Ashley said he is keeping
an eye on, for example, some of the potential concerns that lie in starting up a branch operation or even in the
relatively safe government loan niche. "We don't want to dilute the Lend America name by having a branch on
every corner without adequate controls in place," he said of the branch network the company was considering
putting in place, something he said the company was planning to offer to originators who met its standards. In
return, Mr. Ashley said Lend America was planning to provide branches that met the company's standards with compensation
that would allow them to make an "excellent living" but would also be "reasonable."
Mr. Ashley said some "major mortgage market and private equity" investors attracted by his company's
growth have approached Lend America executives.
He noted that the firm may consider working with such investors "because capital can ... help us to expand,"
but noted that Lend America wants to make sure it can continue to pursue a "focused" business strategy
that doesn't become too wide-ranging and unmanageable. "We ... want to be ahead of the curve but still control
risk and reward," he said.
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