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Card Debt Drives High LTV Mortgages

The hottest new product in mortgage lending is getting hotter as consumer credit card and installment debt now exceeds $1.25 trillion. Last year the mortgage industry originated $3 billion of 125% LTV second mortgage loans and is now expected to close over $10 billion of such loans this year. Maryland-based First Fidelity Financial announced yesterday its mass marketing efforts have paid off, as 125% LTV loans comprise 52% of the company’s total loan production. FFF says the loans are used primarily to consolidate credit card debt.

Fidelity First Financial Corp. (OTC Bulletin Board: FFIR) is pleased to announce a successful launch of an aggressive marketing campaign targeting 125% LTV (loan to value ratio) mortgage loans. The campaign commenced in July 1997 and is now accounting for over 52% of the Company’s total loan production.

125% LTV mortgage products are home equity loans that specialize in consolidating credit card and other installment debt into one second mortgage. The mortgage industry originated $3 billion of 125% LTV loan volume in 1996 and is anticipated to close over $10 billion in 1997. According to Inside Mortgage Finance, “the 125% LTV loan is the hottest new product in mortgage lending,” due to the fact that there is currently a record $1.25 trillion of credit card and installment debt in the United States.

The Company has implemented an aggressive direct mail campaign with current mailings totaling over 500,000 per month and targets totaling over 2,000,000 per month by the end of 1998. Fidelity First has entered into an exclusive operational partnership with The Scribers Inc. (TSI) of Lansing, Michigan to mass market the 125% LTV program for the Company. TSI is a national leader in the telemarketing industry and through the use of high tech predictive dialer equipment Fidelity First is currently calling over 40,000 households per day, reaching an average of 7,500 contacts daily. This marketing campaign has resulted in Fidelity First converting 1 out of 11 leads into an application and the Retail Division closing a company record of 225 loans this month with a loan volume of approximately $10 million.

Fidelity First Financial Corp. is a specialty finance company engaged in the business of originating, purchasing and selling 125% LTV debt consolidation loans and sub-prime mortgage loans secured by single family residences. Through the first three quarters of 1997, Fidelity First has closed $130 million in loan volume which has been generated from over 2,000 closed loans. The Company, headquartered in Columbia, Maryland, operates in twelve states and has over 200 employees. Union First Funding Group, the Company’s wholly owned subsidiary, is the wholesale lending division of the Company, located in Reston, Virginia and has over 60 employees operating in twelve states. The Wholesale Division will close over 250 loans this month with a loan volume of $11 million.

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