Loan Entrepreneur Charts a New Course

When Anthony Hsieh isn’t running his Irvine-based online mortgage company, he regularly skippers a 60-foot yacht, plying the seas in search of quarter-ton marlin and other outsize billfish.

But this month, it was Hsieh who was hooked.

The 39-year-old is selling his Home LoanCenter.com to LendingTree, a unit of IAC/InterActiveCorp that matches borrowers and lenders. Terms of the deal, expected to close by year’s end, were not disclosed.

Hsieh (pronounced SHAY) will report to LendingTree’s founder and chief executive, Douglas Lebda -- another Internet entrepreneur, who a year ago sold his start-up to IAC, which is run by Hollywood-turned-online mogul Barry Diller.

For LendingTree, the acquisition marks an important strategic shift as the company branches out from mortgage finder to loan originator. For HomeLoanCenter, the transaction is a way to become part of a bigger operation -- with a proven brand name -- that can steer it a steady stream of customers.

Hsieh recalled that once he and Lebda started talking about a deal last spring, “it was a meeting of the minds about what we want to do and what we want to accomplish.”

LendingTree, Hsieh added, “understands our culture,” which places a premium on recognizing those who work hard.

Free lunches have been among the perks at HomeLoanCenter’s offices. And each month, the company’s top performer has been rewarded with an all-expenses-paid trip on Hsieh’s yacht.

Exactly what kinds of inducements LendingTree will offer employees remain to be seen. But Hsieh said he himself expected to be among the company’s standouts.

Few doubt it.

After all, Lebda said, Hsieh “has a knack” for bringing in and keeping “customers serious about getting a loan.”

Hsieh got into the online mortgage business in 1999, when he moved his Huntington Beach-based firm, Tricor Mortgage Lending, onto the Internet and renamed it LoansDirect.com.

Two years later, he sold LoansDirect to E-Trade Financial Corp. for a reported $35 million. The acquisition put the Menlo Park, Calif., online stock brokerage into the consumer lending business just as a drop in interest rates touched off one of the biggest refinancing booms in recent history.

At the time, Hsieh said he intended to stay at E-Trade as his company became the foundation for its mortgage unit.

Yet the business of financing loans online was still young, and E-Trade was puzzling through how best to make it all work. “Everybody was trying to figure out what to do,” Hsieh said.

Within a year, he became impatient and left. The parting was amicable, Hsieh said. E-Trade executives declined to comment.

Hsieh then hung out a “Gone fishin’ ” sign and embarked on a months-long expedition for the next big thing -- in this case, well, fish.

He spent more than $2 million building his state-of-the-art vessel Bad Company, hired a team of top-flight anglers and set out on the tournament circuit in North and Central America.

His yachting adventure lasted less than a year, and by summer 2002 he had moored his vessel off Cabo San Lucas, Mexico, and was back on terra firma, eager to start a new mortgage lender.

Using part of his LoansDirect fortune, he founded HomeLoanCenter.com on the notion that he could offer all kinds of home loans -- including purchase mortgages, refinancings and home equity lines of credit -- to consumers with a wide range of credit scores. And he could do it all online.

“Every consumer,” Hsieh said, “deserves the right to get the best loan.”

News that Hsieh was in business again was enough to lure former employees such as Alexandra Shin.

She had worked for Hsieh since 1997, when he ran Tricor.

“I heard he was back and I knew he’d build something bigger and better, so I knocked on his door,” said Shin, who started as a Tricor sales representative, moved to E-Trade when LoansDirect was sold and is now HomeLoanCenter’s senior vice president of corporate development and marketing.

By the end of 2003, HomeLoanCenter had posted about $50 million in sales and originated about $1 billion in loans -- an amount it is on pace to more than double this year, according to the company.

HomeLoanCenter’s staff, which stood at fewer than 100 when the company was launched, is now 700-plus strong. It has continued to hire at a time when many other mortgage firms have been shrinking in the face of the cooling refinancing market.

“So far,” Hsieh said, “we’ve proven that our company can keep growing despite the fact that interest rates are rising.”

For all its rapid expansion, though, HomeLoanCenter is still considered a small fry in the highly fragmented and competitive mortgage lending industry. Last year, more than $3.75 trillion in mortgages were originated in all. (Less than a quarter of them came online.)

“In the big scheme of things,” HomeLoanCenter’s tiny cut of the overall market “puts them in the category of smaller players,” said Guy Cecala, publisher of Inside Mortgage Finance Publications.

That’s among the reasons Hsieh is looking forward to being paired with LendingTree, which helped arrange about $30 billion in mortgages last year.

For its part, LendingTree searched to buy a company that could efficiently handle both first and second mortgages, as well as tend to clients with poor credit ratings. It helped too that HomeLoanCenter, which initially funds mortgages and then sells them in the secondary market, is licensed in all 50 states.

“If LendingTree wants to be a direct lender, they’re better off acquiring than doing it on its own,” said independent online mortgage analyst Scott Cooley of Los Gatos, Calif.

Unlike with the E-Trade deal, Hsieh this time has agreed to an unspecified long-term contract that will give him the title of chief executive of the lending division, the name of which has yet to be determined.

“When I sold to E-Trade, I was a young guy,” Hsieh said. “I would like to think that I have more wisdom and knowledge than I did at 34.”

Besides, he said, “right now I am the biggest fish in a small fishbowl. I’m looking forward to swimming in the ocean.”