High-loan-to-value lenders aren't just the fastest-growing companies in home finance-they're shaking up the way consumers manage their money.

"The financial adviser to the middle class is no longer Smith Barney and PaineWebber, it's companies like us," said Robert Posner, the 28-year-old chief executive of Fidelity First, a fast-growing new player based in Columbia, Md.

High-loan-to-value lenders like Fidelity First allow homeowners to take out mortgages for more than the value of their homes and use the additional cash to consolidate debt. The relatively new industry has spawned several multimillion-dollar lenders virtually overnight.

Fidelity First started making high-LTV loans this summer, and now the product is 70% of its business.

"For the 28- to 40-year-old set, there's an acceptance of debt that wasn't there with their parents," said Mr. Posner. "People feel entitled to take that vacation, to drive a new car. ... There isn't a big emphasis placed on savings."

Most of Fidelity First's customers have been in their home less than three years, he explained. After buying "the dining room furniture, the honeymoon, the wedding, the crib," these new homeowners realize that they've racked up credit card bills that they can barely afford to pay.

"There's a tremendous amount of financial pressure," he said. "We look at the whole picture and save them as much money as we can."

Interest rates on high-LTV loans are generally 3 to 10 percentage points lower than credit card rates. Consolidating debt into a Fidelity First loan saves customers $300 a month on average, Mr. Posner said.

"There are a lot of life-changing experiences. A lot of people leave the settlement table crying," he said. "Before they get the loan, they felt like they had lost control."

High-LTV loans could even bring the national bankruptcy rate under control, Mr. Posner said. "There were 1.2 million bankruptcies in 1996. Of those, 80% would not have happened if the consumer had an extra $300 a month."

Mr. Posner, who co-owned a construction company when he was 20, started Fidelity First in 1995. His formal mortgage experience? A year as a high- producing originator with ICM Mortgage Corp., Greenwood Village, Co.

"When the refinancing era ended at the end of 1994, we went out there and created our own refinancing era," he said. Mr. Posner started going after borrowers who were paying high interest rates.

Fidelity First has grown from three employees to 250. Loan volume is expected to exceed $225 million in 1997, and the company is projecting that revenue will increase from $9.8 million this year, to $50 million in 1998.

The company uses mailings and telemarketing to generate leads, and follows up with calls from loan originators. In addition, it has a wholesale division that provides leads to brokers in exchange for an exclusive purchase agreement.

Despite the number of companies that have jumped into the business, there is "still plenty of room" for a new entries, said Andrew S. Jaymes, senior vice president at First Potomac Mortgage Corp., Fairfax, Va., which makes loans for as much as 150% of a home's value. "It's a trillion-dollar credit industry that needs to get tapped into," he said.

Competition is no threat, said Mr. Posner. "We're crazy, we're intense, and we're playing to win."

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