Check out Denny Hecker’s Web site and you’ll see what you might expect from an auto dealer with 18 dealerships–information about different car brands, pre-owned vehicles and servicing details.
But an unassuming link in the bottom left corner for Denny Hecker Mortgage might also catch your eye.
Mortgages from an auto dealer? You read it correctly.
Hecker, a fixture in Minnesota’s Twin Cities area, has expanded his interests beyond cars. His mortgage company, conceived of in late in 2003, opened for business in February despite the prospect of rising interest rates.
“We feel the mortgage business is a long-term business,” Hecker said. “People are going to buy and sell houses now and, hopefully, forever.”
The home mortgage business has attracted all sorts of newcomers during the past few years as home buying and refinancing loan volumes surged with interest rates at their lowest level in decades. But employment in the loan business has been falling along with higher interest rates and lower refinancing volume in recent months.
Employment in the real estate finance sector hit an all-time high of 457,600 people last July, according to the Mortgage Bankers Association. However, by February that number had dropped to 436,400. In past cycles, employment dropped an average of 18 percent from the peak refinance-boom level, said Doug Duncan, MBA’s chief economist.
Still, some people like Hecker aren’t heeding the higher rates as they break into the field. Instead, they’re looking at home mortgages as a new challenge and a business they believe will continue to grow.
Duncan said post-refi periods can bring expansion as well as layoffs. The focus during high-volume refinance times is on employees who can take in a lot of information and organize it rapidly, he said. When the boom ends, the focus shifts toward employees who can get out and get more business.
That change puts some companies in the position of laying off and hiring employees simultaneously as they seek to carve out their niche in the post-refi environment.
Hecker thinks his new venture fills a niche in the Minneapolis area by building on the powerful car-selling brand name. The company spends about $500,000 a month in advertising on the auto side, making the name well known in the area. That has made it possible for the mortgage company to run a few television commercials and billboard ads and not need to do much else yet in the way of promotion, Hecker said.
Already, the number of loans processed and closed by the mortgage brokerage has “way exceeded our expectations,” Hecker said. He declined to disclose exactly how much business the company has done.
“We’re scurrying to make sure everyone gets good service right now because we’re so busy,” Hecker said.
The brand is part of the draw for borrowers. Heckler said they know what to expect from the company because they’ve bought cars from him in the past.
Hecker sees similarities between helping auto buyers with their credit needs and helping those interested in buying a house or refinancing an existing mortgage. But he doesn’t plan to turn his dealerships into “mini-mortgage centers.” Brochures will be available at the dealerships, but that’s likely to be the extent of the on-site promotions, he said.
The mortgage company is housed in Hecker’s corporate office building, but it will move into its own building shortly. The mortgage staff will increase from 15 to 40 people in the next month or so. Hecker also wants to expand into residential real estate development.
Like Hecker, Kitty Paul didn’t let rising interest rates deter her from entering the mortgage business. Unlike Hecker, however, the Portland, Maine-based writer-turned-broker didn’t have a recognized brand to build upon.
She’d been working as a freelance or on-staff writer for various publications since 1987. Six months ago, she stumbled into a position with New England Mortgage Group as its sole Portland representative.
Paul said getting her name out to real estate agents and others has been a challenge, but business is slowly starting to pick up. She acknowledged her timing was less than perfect, but she isn’t discouraged by the prospect of higher interest rates.
“People have to live somewhere, and they do buy houses,” Paul said.
If nothing else, Paul said, learning the mortgage industry has been a good challenge. If it doesn’t work out, it’ll be time to do something else, she said.
Heather Berhoff, a former recruiter for technology firms, can’t imagine doing anything other than working in the mortgage industry. After she helped her now-boss set up the logistics of Aim Mortgage Corp. in Skokie, Ill., he turned around and offered her a job.
That was August 2002, and Berhoff, who had never had a mortgage, said she had no clue how hot the market was then. She quickly learned and decided to focus on purchase money rather than refinancings.
That emphasis explains why she isn’t much concerned about rising interest rates. Like others who’ve recently joined the industry, she prefers to take a longer-term view.
“It’s a business that will always exist,” Berhoff said. “People are always going to buy houses and need mortgages.”
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