A mortgage broker operating in eight states is targeting prospective borrowers with unpaid collection accounts and home equity. The company has identified several wholesale lenders that still have loan programs available for these customers.
FHM Mortgage Group LLC announced Wednesday that it is working with collection agencies to identify borrowers with equity in their homes to pay off delinquent credit.
The Parsippany, N.J.-based broker, founded last year, reports that it has closed more than $12 million in loans so far using the business model.
"This volume is increasing daily," FHM President Nick Mastrandrea told MortgageDaily.com in a statement. "We expect volume to increase by way of two mechanisms -- expanding our collection agency relationships and the gradual improvement of the credit market."
He noted the company recently established a relationship with a collection agency that has more than 2,500 U.S. employees and said some agencies introduce FHM to their collectors by indicating "refis are back."
Collectors often don't understand how to help borrowers extract home equity, and FHM helps by either finding an appropriate wholesale loan program or helping the borrowers re-establish credit.
Among wholesale lenders FHM has been most successful using are American Financial Resources, Superior Mortgage and Equifirst, he explained. More recently, they have found success with Ideal Mortgage, which funds borrowers with credit scores down to 500.
Among reverse lenders, "Generations Mortgage has been a great partner for us," Mastrandrea said.
He acknowledged that many referred prospects just don't currently qualify because of bad credit.
"That's where the beauty of FHM comes in," he said. "Our senior management team has years of experience in both the mortgage and credit industry, thus we are equipped to counsel customers and give them a plan that will make them eligible for loans in the near future."
During the next 12 months, FHM expects to triple its current staff of 10 as a result of the successful strategy. It says it is currently licensed in Connecticut, Delaware, Florida, Massachusetts, Michigan, New Jersey, New York, Pennsylvania and Rhode Island and hopes to be nationally licensed by December.