Russ: Hi, I’m Russ Capper and this is BusinessMakers USA, brought to you by Insperity, inspiring business performance.  Today, in San Antonio, Texas, where my guest is Marcus Spitzer, Co-founder and President of Directions Home Loan. Marcus, welcome to the show.

Marcus: Pleasure. Thanks for having me.

Russ: You bet. Tell us about Directions Home Loan.

Marcus: Directions Home Loan does mortgage loans for the surrounding area, San Antonio, and most of Texas.

Russ: So, the mortgage business, supplying mortgages is a fairly competitive business. What separates you guys from your competitors?

Marcus: Well, for a mid-sized mortgage company we consider ourselves a boutique type of mortgage where service comes first. Unlike some of the larger box chain mortgage companies, we start with the loan origination, and that process carries through through closing with the loan originator participating the entire time during this.

Russ: If I was a customer and doing business with you, what you’re saying is I would be dealing with the same people the whole way?

Marcus: You would. You’d get that comfort in knowing that your mortgage—the accountability in the comfort of knowing your mortgage is being handled by the professional that you’re talking to who is a licensed loan officer, not somebody necessarily who is a document gatherer, but a decision maker as well.

Russ: How old is the company?

Marcus: The company is about ten years old. We were founded in 2008 with my partner and I.

Russ: Even in the last ten years it’s been a pretty dynamic, wild ride, hasn’t it?

Marcus: It has, with lots of regulation, you know. If anything, you saw some attrition in many big banks and retailers getting out of the mortgage industry. So, it kind of allows us smaller, more nimble companies to squeeze in there and gather some of the market share.

Russ: I sort of was in the business in a different way than you during much of that period, and really, before that too, and boy, the subprime mortgage thing and all of that was very turbulent. Were you in the business before you started Directions Home Loan?

Marcus: We were. My partner and I were working for a mortgage company that was bought out by Country-Wide, and then we had a decision: do we say with Country-Wide or do we go out on our own? We decided, obviously, to go out on our own.

Russ: Well, good for you. You’ve taken a risk, though, in doing that.

Marcus: Sure we are, but we knew the business, and we knew our market. Of course we saw a lot of these large companies come in and start buying up the smaller companies, and what happened is a lot of them went out of business. If it wasn’t then, it would have been a year or two later as you saw Country-Wide has gone out of business shortly thereafter.

Russ: Everybody likes to pay attention to rates these days, and I’m obviously old enough to have seen the 20% and the negative amortization, is that what they called them?

Marcus: Negative amortization loans, or pick-a-payment loans.

Russ: Pick-a-payment loan. Ok, so just recently it kind of seems like it’s headed in a direction right now?

Marcus: Rates are going up, which may start to make some of these other types of loans more attractive. Not necessarily the negative am type of loans, those are heavily regulated, but more the adjustable rate type mortgages. Although, home ownership has increased, I would say, length of time in a home has increased. It used to be an average of six, seven, eight years, but it seems like with our economy kind of working its way out, homeowners have been in their homes for ten, eleven years as an average. If the trend continues, you might find—if the trends and rates continue to rise, you might find some of these adjustable rate mortgages more attractive to home buyers as for the first five, six, seven, even ten years, they’re fixed. At that point, the homeowners may be ready to move, move onto a larger home, or a different state.

Russ: It almost seems to me they’ve been so low for the last few years that adjustable rate mortgages might have gone away for a while, too, but they never did?

Marcus: No, they’re pretty attractive, especially for the higher end homes. The price range when you get up into the five, and six, and sevens, you can see payments are substantially lower, rates are still available in the threes. Whereas, jumbo rates are somewhere in the four and a half, five range.

Russ: I’m sure people are tuning in right now wanting to know, ok, what is he predicting? What do you think they’re going to be doing over the next couple of years, in general?

Marcus: I think they’re going to continue to creep up over the next few years.

Russ: So, if somebody is interested they should move fast instead of slow.

Marcus: Move fast because, well, another problem we’re having here locally is inventory. Typically, to have a healthy market you need six months of inventory. San Antonio is at about three. So, it’s a seller’s market. It’s great if you’re selling your home, but if you’re looking to buy, unfortunately you’re competing with a lot of borrowers out there.

Russ: Well, Marcus I really appreciate you sharing the story of your company with us.

Marcus: Thank you so much.

Russ: You bet.  And that wraps up my discussion with Marcus Spitzer, Co-founder and President of Directions Home Loan. And this is BusinessMakers USA.