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Ditech.com dreams of big growth in home-loan business despite softening market
(Orange County Register, The (CA) (KRT) Via Thomson Dialog NewsEdge) Nov. 26--Ditech.com is a heavy self-promoter.
Until recently, its marketing included ubiquitous TV ads featuring a frustrated competitor -- "Lost another loan to Ditech." It's also fond of supersize billboards by freeways.
Along the way, Ditech pitched itself as a quick-and-easy lender with a focus on simple home-loan refinancing.
Richard Powers, the new top guy at the Costa Mesa-based lender, wants to change all that. Or at least, he has some major retooling in mind.
He's got his work cut out for him, though.
Powers, 50, wants to expand at a time when the entire lending market is shrinking. He expects industrywide loan volume to drop in 2007 amid a softer housing market.
Others agree. The Mortgage Bankers Association pegs the likely decline at 14 percent.
That means big lenders and investment banks will continue to buy smaller, troubled companies, Powers said. And embattled lenders unable to find a buyer could shut down, he added.
"It's just a classic case of excess capacity chasing too little demand," Powers said.
Yet bullish Powers says Ditech can still grow next year by expanding its reach and reshaping its sales pitch.
The Newport Beach resident replaced Mike McCarthy, who left Ditech in June "to pursue other opportunities," the company said.
Powers wants to make more loans to borrowers with less than stellar credit profiles. Such loans, dubbed subprime, account for 13 percent of Ditech's business, he said.
Powers said he wants to get that number closer to the industry average of 20 percent.
Yet doing more subprime loans won't be easy for Ditech, said Al Hensling, who heads Irvine-based mortgage brokerage United American Mortgage.
That type of lending is flooded with savvy competitors, Hensling said.
Orange County is home to three of the largest such lenders in the nation: New Century Financial and Option One, both based in Irvine, and Orange's Ameriquest Mortgage.
Ditech is "kind of coming to the party late," Hensling said.
Still, subprime is just one of Powers' goals, as well of those of his bosses at Detroit-based GMAC, which owns Ditech. (Auto giant General Motors is selling a 51 percent stake in GMAC to a group of investors led by Cerberus Capital Management.) Powers wants Ditech to make more home loans to buyers -- now a small portion of its business, he said. Opening retail branches is one option, he said.
And the company is rethinking its marketing. It will scale back on billboard advertising, which doesn't bring in much business for the cost, he said.
"We are doing a full-blown review of the various channels we utilize for getting our message out," Powers said. "We are making some changes." Ditech will focus on new television ads and Internet advertising, he said.
Ads set to debut in 2007 will be "edgy," Powers said, declining to elaborate.
To help direct marketing, the company hired Keith Goldberg, who oversaw Capital One's "What's in your wallet?" campaign.
As for home-loan refinancing, Ditech's staple business, Powers said two-thirds of existing customers are switching from an adjustable loan to a fixed. They are worried about the potential of bigger payments as interest rates rise, he said.
"People can tolerate more risk in an investment portfolio than in housing expense," Powers said.
CORPORATE
--Image: Richard Powers is rethinking Ditech.com's advertising strategy and says some of the giant freeway billboards will come down. New, "edgy" ads will appear next year.
--Tower of lending power: The Ditech.com building on Park Center Drive in Costa Mesa is one of the largest in the area.
--New leader, new direction: Ditech.com's Richard Powers wants to take the company's lending in a new direction and make more loans to homebuyers instead of relying on home-loan refinancing.
RICHARD POWERS
--Title: General manager, Ditech.com
--Age: 50
--Book he's reading: "It's Your Ship: Management Techniques from the Best Damn Ship in the Navy," Michael Abrashoff
--Last movie you saw: "The Departed." Powers said Leonardo DiCaprio's acting lapped that of Matt Damon. "It was no contest."
--Hobbies: Mountain biking, tennis
--Past Jobs: Ran the Western division of Sherman Oaks-based Metrocities Mortgage. Before that, led the mortgage arm of Los Angeles-based homebuilder KB Home.
--Most proud of: Raising 13-year-old daughter
To see more of The Orange County Register, or to subscribe to the newspaper, go to http://www.ocregister.com.
Copyright (c) 2006, The Orange County Register, Calif.
Distributed by McClatchy-Tribune Business News.
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