Most online mortgage lenders are bleeding cash and struggling to attract new business, but one company says it has a lucky charm that brings customers and profits: His name is Bob Vila.

Home123.com, a mortgage and home equity company, has used the star of “This Old House” as its national spokesman since its inception in 1998. Company officials say the endorsement has been crucial to its success.

“We think that if you start to talk to the consumer without any trust, you’ve got a long road to hoe,” said Joseph D. Doyle, president and chief executive officer of Home123.com, of Ponte Vedra Beach, Fla.

“What we did was to rent 20 years of trust in the Vila name, giving it to us immediately when we went on the air,” he said. “When our consumers call us, they already trust the brand. We get a higher call-to-application ratio, and we get a much higher conversion rate” than other online lenders.

Though not a direct lender — company documents call it a “national marketing company” — Home123.com has a partnership with Conseco Finance in St. Paul, which funds the loans. Mr. Doyle said he has had several offers to take the company public, but that the plan for now is to sell the Home123.com brand to a large lender “within the next two to three years.”

Some of the biggest names in online lending, such as E-Loan and LendingTree, have spent millions in branding and marketing efforts but have yet to turn a profit. Mr. Doyle says his company is “very profitable.” He would not give any numbers, but said the company’s earnings were “in the modest seven figures” in the last quarter.

Last spring a number of players, such as Mortgage.com and FiNet.com, shifted from direct-to-consumer lending to business-to-business after marketing efforts failed to increase volume and revenue. An official at FiNet.com, which lost more than $35 million last year after an eight-month branding campaign, said advertising for online lending is like “throwing money down a hole.”

Observers say effective branding is so elusive in this business because mortgage transactions are so infrequent — they happen once every five to seven years at best. Even the top four conventional mortgage lenders have market share of 6.4% on average; Bank of America Corp., the top originator in 1999, held just over 7.6% of the market.

Mr. Doyle says his company spends $1 million a month on television, radio, print, and direct mail.

“We know which media to buy,” he said. “Every time we run a commercial —TV, radio, print — it makes money.” Of the 400 or 500 television stations and mailing areas that he has tested over the years, he has identified about 50 that are “great. There are certain demographics that work better than others.”

E-Loan and LendingTree have “probably spent hundreds of millions of dollars, just like the Amazon.com model,” he said, “and I’m not sure that it’s ever going to pay back.”


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