Tuesday, May 08, 2007

Mother Theresa Update: The Ownit Story

by Tanta on 5/08/2007 10:11:00 AM

Sorry I'm up so late this morning. Those of you who were hanging out here yesterday may already be tired of this new genre of news story, but I'm not. I read everything by Vikas Bajaj on principle, and today I was once again not disappointed. "A Cross Country Blame Game" is chock-full of good stuff. It gives us the touching story of Bill Dallas, owner of the now-defunct Ownit Mortgage:

That desire to expand homeownership fed Mr. Dallas’s own entrepreneurial fire.

“I am passionate about the normal person owning a home,” said Mr. Dallas, who is also chairman of the Fox Sports Grill restaurant chain and manages the business interests of the Olsen twins. “I think owning a home solves all their problems.”

As he discusses homeownership, Mr. Dallas becomes animated and his voice rises. He fetches copies of a booklet, “Strategic Financing: A Survival Guide for Loan Originators,” he helped write for loan officers and brokers, and points to charts and tables to help explain his thinking. His speaking style seems part revival preacher and part courtroom lawyer.

Mr. Dallas created Ownit from a small mortgage company he and his partners bought in 2003 for $30 million. Two years earlier, he had left First Franklin, a lender he co-founded in 1981 and which was then owned by National City. (Merrill Lynch bought First Franklin last year for $1.3 billion.)

Ownit was different from other subprime lenders. About 70 percent of the company’s loans were made for the purchase of homes, while about 60 percent of all subprime loans were used to refinance existing debts.

Mr. Dallas, a native of Ohio who moved to California as a young adult, said he created Ownit to serve borrowers who earned less than $100,000 and had less than $100,000 in assets, a group he calls the “mass nonaffluents.”

I think we've just figured something out about that "subprime serves the poor" argument.