United Cos.' Ginger Mae Unit Aiming to Double Lending

J. Terrell "Tee" Brown Jr. is looking for a few good mortgage bankers to do business with.

As president of United Companies Financial Corp.'s Good Neighbor Reinvestment Mortgage Assistance - or Ginger Mae - division, he is hoping to increase originations more than 100% in 1996.

The Ginger Mae program, which has nothing to do with Fannie Mae or Ginnie Mae, is United Companies' attempt to snare bank customers who don't qualify for conventional mortgages.

Developed in 1993, Ginger Mae partners with banks to offer loan products designed for borrowers with troubled credit histories. United Companies buys the loans after they are underwritten by bank employees, then securitizes them.

Currently, the division has links with mortgage offices of more than 300 institutions, including Huntington Mortgage Co., Columbus Ohio; SunTrust Mortgage Inc., Atlanta; and National City Mortgage, Cleveland - and is hungry for more. "We're looking for someone who understands mortgage lending," Mr. Brown said.

Starting the new division hasn't been entirely smooth sailing, Mr. Brown said. "Originally we hired people with previous banking relationships but with no understanding of the product we were offering," he said.

Poor origination numbers prompted an overhaul of the sales staff to include representatives with nonconforming-loan experience.

The Ginger Mae program originated more than $50 million of loans in the first half of 1996, a more than 150% increase from the same period of 1995.

Cultural differences between nonconforming lenders and banks dictate that United Companies spend a long time setting up a working relationship.

Getting banks comfortable with nonconforming loan products, and committed to selling them, Mr. Brown said, are big obstacles to originating loans.

United Companies trains bank employees, from tellers to upper management, to underwrite nonconforming loans, at no cost to the bank. In fact, it takes six to nine months to get a bank generating loans on a consistent basis, Mr. Brown said.

Cost evaluation is premature, he said, because United Companies is hoping to introduce other loan products to participating banks, including manufactured home and home improvement options.

"We're looking for a cross-selling opportunity," he said. "We want to be on the retail side."

Marketing nonconforming loan products to a bank is never easy, said a finance company executive who had tried a similar approach. "When we first walked into the bank," the executive said, "the interest was incredible. But the psychology of the loan officers there made it difficult for them to put the program into place."

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