LoanGiant'Com

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LoanGiant.Com

• Kanwal Bagri
• Philippe Burney
• Steve Chang
• Srinivas Chitrapu
• Sita Ram Jonnalagadda
• Courtney Ruf

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Company History

• World Wide Financial founded in 1990 by four
  partners.
• By 1993, WWF was originating 100 million in
  conforming mortgages per month.
• In 1994 due to the changing interest rate
  environment, WWF reevaluated their strategy and
  changed their focus to the sub-prime market.
• WWF began doing business as LoanGiant.com in
  March of 2000.

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LoanGiant Guarantee
LOANGIANT.COM pledges to be your Lender for
Life. We will close your loan faster than anyone
else using our instant on-line approval or by
phone regardless of your credit and/or financial
situation. Each of our borrowers should receive
at closing a financial plan or budget to
ultimately lead them to financial freedom.
LOANGIANT.COM guarantees to beat any bonafide
mortgage deal offered in writing to any existing
customer. MORTGAGE SHOPPING IS OVER.
LOANGIANT.COM IS YOUR LENDER FOR LIFE!
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Mortgage Industry

• 2.03 trillion dollars of mortgages were
  originated in 2001
• 67 of Americans own homes
• Real estate lending market is changing from a
  purchase market to a refinance/cash-out market
• Mortgage loan applications have more than doubled
  in the previous three years

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Current Market

• Lowest mortgage rates in years
• Real estate lending market has changed from a
  primarily purchase market to a refinance market
  due to interest rate environment
• Real estate market is also doing well in spite of
  the economy
• Mortgage loan applications have more than doubled
  in the previous three years

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Subprime Borrower

• Banking regulators consider you to be a subprime
  borrower if you have a FICO score of 660 or
  lower two (or more) 30 day delinquencies in the
  past 12 months, or one 60 day delinquency in the
  past 24 months a foreclosure or chargeoff in the
  past 24 months any bankruptcy in the last 60
  months qualifying debt-to-income ratios of 50
  or higher and, "limited ability to cover family
  living expenses each month.
• http//www.hsh.com/cc-showcase.html

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Industry Players

• Mortgage Companies
• A firm or individual who, for a commission,
  matches borrowers and lenders. A mortgage broker
  takes applications and sometimes processes loans,
  but generally does not use its own funds for
  closing.
• Wholesalers/Servicers
• A term used by Fannie Mae and Freddie Mac for a
  mortgage banker or other entity that has met the
  requirements necessary to sell and service
  mortgages for Fannie Mae or Freddie Mac.
• Investors

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Investors

• FNMA (Federal National Mortgage Assoc.)
• The nation's largest mortgage investor created in
  1968 by an amendment to Title III of the National
  Housing Act (12 USC 1716 et seq.) this
  stockholder-owner corporation, a portion of whose
  board of directors is appointed by the President
  of the United States, supports the secondary
  market in mortgages on residential property with
  mortgage purchase and securitization programs.
• FHLMC (Federal Home Loan Mortgage Corp.)
• Created by Congress in Title III of the Emergency
  Home Finance Act of 1970 (12 USC1451 et seq.).
  This stockholder-owned corporation, a portion of
  whose board of directors is appointed by the
  President of the United States, supports the
  secondary market in mortgages on residential and
  multifamily properties with mortgage purchase and
  securitization programs.
• GNMA (Government National Mortgage Assoc.)
• Created in 1968 by an amendment to Title III of
  the National Housing Act (12 USC 1716 et seq.),
  this federal government corporation is a
  constituent part of the Department of Housing and
  Urban Development. Among other governmental
  functions, it guarantees securities backed by
  mortgages that are insured or guaranteed by other
  government agencies. Also called Government
  National Mortgage Association (GNMA).
• Private Investors

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Life of a Loan

• Application is taken from the borrower over the
  internet, over the phone, or in person.
• The mortgage is underwritten to ensure the
  borrower is deemed credit worthy.
• Information is gathered from the borrower, a
  title company, and an appraiser to support the
  underwriting decision.
• The loan is closed. Documents are signed and
  funds are exchanged.
• The mortgage broker sells the loan to a
  Wholesaler/Servicer.
• If the Wholesale/Servicer does not want to retain
  the loan, then they sell the loan to an Investor
  otherwise the Servicer is also the Investor.
• The Investor securitizes the mortgage in a pool
  of similar mortgages.
• The borrower makes their monthly payments to the
  Servicer which is then passed through to the
  holder of the Mortgage Backed Security.

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Plans and Goals

• To be our customers Lender for Life.
• Give the same high-quality level of service to
  all borrowers regardless of credit history.
• Transaction based vs. Relationship based
• A fairly priced sub-prime loan
• No point, no fee
• Shop around

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Business Plan
Phase I Develop a website to approve borrowers
on-line, real time regardless of their credit
history. Phase II Enhance the website so that
all Internet users can and will be marketed.
Phase III Enhance website so all borrowers
located anywhere in the US can be contacted by a
local LoanGiant.com agent. Phase IV Complete
the transition of off-line mortgage banking
operations to a full-scale on-line Internet
operation that offers the full spectrum of
financial and household services to any user or
visitor to the site.
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Marketing Strategy

• The five elements of a typical marketing strategy
  include
• Scope
• Goals and Objectives
• Resource Deployments
• Identification of sustainable competitive
  advantage
• Synergy

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Scope

• Target Market
• Sub-prime nonconforming 25-49 years old
• Product Line Depth and Breadth
• Jumbo, Second, LTV, FHA,VA, conforming and
  nonconforming

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Scope (Continued)

• Product Market Development Plan
• National Marketing
• Complete Online Processing
• Web Enabled Contact center
• Follow up on uncommitted web users
• Complete financial partner and household services
  provider.
• Line Extension
• Adding value by offering services to existing
  products.

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Goals and Objectives

• Move towards CRM Complete Financial Partner
• Increased Market Share
• Project Low Cost image
• Make the loan process less intimidating
• Encourage Rate Shop

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Resource Deployments

• Majority of companys advertisement budget is
  spent on broadcast and cable television which
  company finds most effective in reaching its
  intended audience.
• Focus on automation of home loan process.
• Online home loan completion through intuitive
  automated application

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Competitive Advantages

• Online presence
• LoanGiant has the strongest online presence
  compared to its competitors.
• Brand recognition
• Andy Jacobs recognition in the marketplace is
  very pronounced.
• Experienced staff
• The experienced loan officers at LoanGiant offer
  the best service.

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Synergies

• Industry Consolidation
• Online Partnerships
• Integra, Better Business Bureau, Service Reps,
  Verisign, and Dell computers.
• AmWay, term-life, free legal advise

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Strengths

• Automation / Home Equity Software
• Efficiency
• Two-minute Loans
• Technology (potential)
• Dot-com
• Web-site
• People
• Skills, Talent (Sales, IT, Customer Service)

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Weakness

• Cash Flows
• Required for operations
• Prospecting
• Inability to gauge potential customer

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Opportunities

• Growing internet usage
• Over 150 million on-line
• 75 households on-line by 2004
• On-line spending forecasted at 86.3 b in 2003
• Technology / Security
• For on-line transactions
• Tracking usage, on-line habits
• Closing a gap in the on-line market place
• Niche, first-to-market

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Threats

• Predatory Lending
• Bigger players have more leverage
• Regulations
• On fees, points charged and premium
• Reliance on traditional channels
• Interpersonal experience
• Not to be confused with another dot-com
• SPAM could reduce credibility, increase clutter

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Threats (continued)

• Interpersonal experience more likely to succeed
  in selling
• On-line users less likely to commit to a
  contract
• Cannibalization
• Distrust
• Of sub-prime lenders
• Imitators
• Technology can be easily copied

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Analysis/Recommendations

• Acquire customer using a combination of
  interpersonal and internet experience
• Level of commitment expected from customer
• Formal CRM to maintaining customer base and a
  long term relation
• Track customers, feedback
• Build a strong and publicized alliance
• Customer base and cash flow

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Recommendations (continued)

• Moving away from a total dependence on the sub
  prime market
• First Mover needs Large scale entry
• Threat of imitators
• Ensure excellence in quality and service
• Use new technologies to improve business
  processes and meet expansion needs

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Recommendations (continued)

• Use of Portals
• Enhance customer experience
• Track customers in more detail

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Recommendations (continued)

• Capitalize on technology
• - Keep the user engaged
• - Use relevant pop-up messages
• - Make the application form as short as
  possible
• - Implement a CRM system

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Recommendations (continued)

• Target Market
• Advertising is key for the sub-prime market
• Instill a sense of trust in the borrower
• Word of mouth advertising
• Provide exceptional customer service so customers
  will pass the word that LoanGiant.com is great
• Ideas for developing the peer to peer marketing
  model
• -Using a more grassroots approach

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Recommendations (continued)

• Business Alliances
• LoanGiant.com as a streamline business model
  allows growth as a stand alone mortgage
  processing firm
• Develop into a lead generating target marketer.

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Thank you
Any questions?