Preferred Mortgage Corp., Irvine, Calif., says it has experienced a surge in originations as a result of the introduction of a home equity program a year ago.
In fact, the surge made it the biggest independent home equity lender in the second quarter of this year, according to a California trade publication.
Todd A. Rodriguez, chief executive officer, said, "Our growth strategy in 1994 was diversification of our lending programs, the success of which is demonstrated by doubled loan production every month, fueled by home equity loans. This has allowed us to expand operations into most western states."
With the market for first-trustee conventional loans slowing down, we knew we had to make some changes. We saw another market emerging in home equity loans, and we stepped in and made the commitment.
Mr. Rodriguez said the company offered loans of up to 100% of equity, with a ceiling of $50,000. He said such loans were proving extremely popular in California. The company has made a special effort to keep application and closing costs down, he said. Appraisal and title fees are low and no private mortgage insurance is required.
"Especially appealing is that the loan funds may be used for any purpose," Mr. Rodriguez said.
A key part of the company's strategy is to make loans only to people with high scores on the Fair, Isaac cycle-scoring model. Mr. Rodriguez said that because of this underwriting approach, Preferred was making "character loans rather than equity loans." He said the approach was well-tailored to the California market, which has seen little price appreciation in recent years.
Mr. Rodriguez says he grew up in the mortgage business, working for his father's company, Stewart Wright Mortgage in Orange, Calif., before founding Preferred in 1989.
Some 80% of Preferred's volume is now in equity loans, according to an announcement. The company specializes in single-family residential lending through its 10 offices.
