A finance veteran works to grow MortgageRamp.com into the leading virtual community for borrowers,and lenders.
Michael Greco, CEO of MortgageRamp.com, loves the challenge of tackling a job that's not run of the mill. While working at DLJ in the early 1990s when the thrifts imploded, Greco established Column, one of the true pioneers in conduit lending. In 1994, he led the launch of a capital markets group at First Union National Bank.
A 25-year industry veteran, Greco's newest challenge is to grow a fledgling online lender into a household name. He is in the midst of a campaign to raise $50 million to $75 million in capital for MortgageRamp, an Internet-based commercial mortgage company owned by GMAC with headquarters in Horsham, Pa., and Charlotte, N.C.
A traditional approach MortgageRamp, which launched in May, serves as a virtual community where borrowers, brokers, lenders and vendors come together. Its ties to heavyweight GMAC and its aggressive pursuit of strategic partners combine to give it a leg up on the competition, emphasizes Greco. In addition, MortgageRamp offers financing in a variety of forms: debt, equity, mezzanine and floating-rate.
"Investors are telling us that they believe the survivors in this space will be those players which are old-world companies using their balance sheet, know-how and experience to develop new-world technology,' says Greco. "Certainly we consider MortgageRamp.com right down the middle of that fairway.'
Big backing The online lender is 100% owned by GMAC, which has committed $25 million in cash. Once the capital drive is completed within the next 30 days, GMAC's ownership will be diluted to about 70%.
MortgageRamp may not be the first to test the waters of online lending, but its late entry into the marketplace could work to its advantage by avoiding the mistakes of others. Via the use of focus groups and analysis, MortgageRamp discovered that lenders were frustrated with existing online financial sites because the information they received from borrowers was "junk." A borrower withvalued at $2 million might request a $5 million loan. A lender would spend four hours combing over the entry only to conclude it was a bad loan.
In light of those concerns, MortgageRamp has built in a scrub process whereby it makes sure the information input by the borrower passes the test before being forwarded to the lender making the credit decision.
"A lot of our competition thought that you would win the race if you signed up 250 lenders. Little did they think about what that meant,' says Greco. "About 150 of those 250 lenders only do two to three loans a year. They are tiny players." Instead, MortgageRamp has pursued the top 15 lenders in the industry that close 90% of the business.
Greco says the revenue model resembles a highway with tollbooths placed along the route. The site charges for a virtual broker, should borrowers need one. It charges for the lender when a loan closes. It sells appraisal. MortgageRamp has its own lawyers that close loans.
"My analogy is a ball game," Greco says. "We're in the bottom of the second inning. We have scored some runs, we have some men on base, but the game isn't over. All I can tell you is we have a deep bench.'