A California mortgage company has increased its direct marketing division to meet the growing demand for new and re-financed mortgages and establish a presence in the ultra-competitive conventional and subprime loan markets.
First Mortgage Corp. (FMC), Diamond Bar, CA, hired 30 people in the first quarter to bolster a business that saw its volume of new loans increase 105 percent to $161.66 million. Revenues grew 39.9 percent to $5.95 million, net income rose 27.1 percent to $253,000 for the quarter, and net income jumped 37.3 percent to $1.53 million for the fiscal year.
FMC has used direct mail for the last 10 years to market its government-backed FHA and VA mortgages. As both are tied to interest rates, demand for these mortgages is cyclical and has caused FMC to shrink or grow its staff to keep pace. Clement Ziroli, chairman and CEO, said the direct marketing division has been cut to as few as four people in times of slack demand. The company is expanding its loan offerings to become less interest-sensitive and stabilize its work force.
“We have to do that to survive as a mortgage banker,'' Ziroli said. “There aren't too many people left like us in the business. If we don't convert, we won't be left either. We know mortgages — it's just a different product we have to introduce.''
Ziroli estimated that more than 10,000 direct mail solicitations detailing loan products are sent out each month and account for 25 percent to 30 percent of his company's business. FMC uses its database of 17,000 outstanding loans for some prospecting and rents lists for additional names. Loan applicants respond by telephone or send in information cards for follow-up calls.
In entering the conventional and subprime loan markets, Ziroli said direct marketing will allow FMC, which maintains eight offices in California and Arizona, to compete with low-cost-loan products offered by major regional and national banks.
“It gives us a different opportunity to do business on a direct basis rather than the traditional way of finding builders or Realtors that are selling houses,” Ziroli said. “That's where the competition is most fierce when you have a Realtor or builder involved.”