Home Equity Wholesaler Gets into Retail, Under New Name

RAC Financial Corp. has spent its 10 years in the home equity business building up to the summer of 1996.

The Dallas-based loan wholesaler has decided it has already generated enough steam through correspondent lending and securitization efforts. Now, it believes, is the time to head into retail.

And it is kicking off the new campaign with a name change - it will now be known as FirstPlus Financial Group.

The company will be spending $10 million to $12 million over the next 12 months on an aggressive nationwide advertising campaign, said Eric Green, chief financial officer.

"We've established ourselves and our products in the industry, and now its time to make a name for ourselves with consumers," Mr. Green said.

Dan Marino, the Miami Dolphins quarterback, will be the company's spokesman for a series of television spots slated to appear around the country, starting in late July in the Northeast.

FirstPlus will also be using telemarketing efforts and direct mailings in conjunction with the ad campaign.

The company has already begun its direct mail campaign on the East Coast, using names culled from lists of homeowners holding first liens with major mortgage companies.

FirstPlus is also in the process of acquiring regional finance companies, Mr. Green said. The company plans to purchase at least two finance companies in the Southeast, he said, and is looking for well- established operations with 35 to 60 branches.

FirstPlus is not planning to close its correspondent lending channels despite the shift to retail, Mr. Green stressed.

"We're not going to undercut them. We don't want to put our correspondents out of business," he said.

The company's plans have already drawn the attention of Wall Street. Keefe, Bruyette & Woods Inc., New York, recently initiated research coverage of FirstPlus Financial Group with a "buy" rating.

FirstPlus has a "massive" potential for growth, Keefe, Bruyette & Woods reported. The company is expected to originate $1.3 billion in loans in 1997, up from a little more than $100 million the 12 months ended September 1995.

The unusual niche it occupies will guarantee that earnings are up to or above expectations, Mr. Green said. FirstPlus specializes in high-loan-to- value second mortgages, made to consumers with slightly blemished credit.

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