Customer satisfied with service




From the November 14, 2003 print edition of Business First Fast 50



     In 1999, when many people were leery of financial information exchanges over the Internet, First Commonwealth Mortgage Corp. was preparing to delve into the world of e-commerce to promote financial services on the Web.
First Commonwealth originates, underwrites and funds residential mortgage loans.
The Company was founded by CEO Jeff Houk , 34, and partners Tim Poole, 35, John Shunnarah, 34, and Juan Montano, 34. Houk previously had owned his own mortgage business in Louisville .

Houk said that about 90 percent of the company’s business is done over the Internet, with the remainder handled through the company’s offices.
The Louisville based company has offices in Lexington and Cincinnati and is licensed in eight states, with pending licenses in seven others.
Houk said loans originated by First Commonwealth are sold to other commercial lenders.
Houk said that there were some reservations about using the Internet to generate business, rather than relying on the traditional business model of direct mailings, print and electronic advertisements and referrals. But in the end, those reservations quickly were erased as the country’s economic picture changed.
Houk said that consistently low interest rates during a three-year period, coupled with customers’ willingness to cast aside their fears and seek a mortgage over the Internet have produced three years of economic growth for the company.
He declined to disclose net income or revenue figures, but said that the company has grown “four fold” over the past year.
“We have been very fortunate that interest rates have been as low as they have,” Houk said. “We’ve also been fortunate that more and more people who are looking for the best deal in a mortgage are becoming more willing to provide information over the Internet and consider us in the same light as the big money centers.”
Houk Said First Commonwealth gets about 90 percent of its leads by marketing through other Web sites.

Customer satisfied with service
     Dr. David Schaefer and his wife, Suzanne Schaefer, recently financed their new home they purchased in the Owl Creek subdivision off Dorsey Lane through First Commonwealth.
Schaefer said he received the best rate from the company and was not apprehensive about using the Internet to arrange for financing. “I needed a mortgage in a week’s time, which is extremely rushing things in the mortgage business, but they really hustled and came through for me,” Schaefer said.
“And that wasn’t just trying to show me a 30-year fixed rate. The person I worked with was very knowledgeable about a number of different financing options and set me up with a plan that I am quite comfortable with.”
“I feel very comfortable recommending these guys,” Schaefer said. “They can tell you in a hurry what your options are and what the risk level is to you so you know what you are getting into.”
Houk said that although he and his colleagues sometimes wish they could re-think some of the day-to-day decisions they have made, he doesn’t believe the company has made any major mistakes, or that they have any regrets about the way they have managed First Commonwealth through this period of fast-paced growth.

Continued Growth Predicted
     Although interest rates have inched up during the past several months, First Commonwealth is poised for continued growth. In August, Business First reported that the Kentucky Economic Development Finance Authority gave the company preliminary approval to receive up to $973,000 in tax incentives over 10 years. The project will allow the company to lease an additional 10,000 square feet of office space to add to the current total of 17,000 square feet.
It was the second time in less than a year that First Commonwealth had received KEDFA incentives. In October 2002, the company was granted incentives for expansion of office space and the addition of 45 jobs.
The company has grown to 123 employees from 55 in 2002. More employees will be added sometime in early 2004, after a lease is signed on the additional office space, Houk said.
“The key to continued growth in this business is these employees, so we try to provide continuous training and a positive corporate culture that makes people want to stay around here and make phone calls until every night,” Houk said.
“This is a high-turnover profession, but we have continued to grow through employee referrals because good people usually run around with good people.”

Facing the future
     Houk said the employees and their knowledge will become more important than ever as Internet financing grows and becomes more widely accepted.
“People will make the difference in our growth because competition will grow in the future,” said Houk, adding that the industry projections show Internet mortgage lenders capturing as much as 10 percent to 15 percent of the total mortgage market share during the next decade.
“I don’t think we’ll ever see a day when people will embrace buying a shirt over the internet because they want to go into a store and touch it and feel it,” Houk said. “But with something like finding a mortgage, our money is just as green as any large money center bank , and when it comes to finding the best deal, more people will be looking in our direction.”
A representative of one of First Commonwealth ’s business partners agrees that Internet lending is becoming more common, especially with the advent of no-call lists that have changed the way many mortgage companies solicit business.
“Mortgage companies have been forced to look at other avenues, and this is becoming one of the most popular,” said Matt Puffer, area sales manager for the Louisville office of Countrywide Home Loans Inc., a final lender First Commonwealth arranges mortgages through. “I think you’ll see more competition on the Internet in the future.”
Countrywide has a good business partnership with First Commonwealth , Puffer said.   “Their people are very professional, and their business is very organized,” Puffer said. “We get steady business from them.”

Adjusting to slower home sales
     Employee knowledge also will be a valuable resource as Internet based mortgage companies battle head-to-head amidst increasing interest rates, Houk said.
     “We’ve been lucky for so long, but now you see those interest rates beginning to creep up just a bit,” Houk said.
“The number of people looking to finance homes is starting to slow down, which is going to force us to work that much harder to react to the market and remain competitive.”


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