By: Carl Corry
Long Island Business News
MELVILLE - March 24, 2000 Rushing to capitalize on the fast-growing B2B e-commerce and financial services markets, Mortgage Warehouse is positioning itself to offer clients such new services as commercial, small business and auto loans through the Internet. The move is expected to progress in stages over the next year and is an expansion

of a current program - called Mortgage Associates - that the company established last year with accountants, financial planners and insurance agents to add to its mortgage originations base.

The firm, which did about $190 million in mortgage originations last year, said the new effort should bring in about $250 million in new loan originations by 2001.

The firm is licensed in New York, New Jersey, Connecticut, Michigan and California with immediate plans to expand into Colorado and Ohio. To reflect its new efforts, the company is in the process of establishing a new campaign and Web site, verticallend.com, which will replace the Mortgage Associates program. And to push it on its way, Mortgage Warehouse President David Peskin said the company is in the process of raising $2 million in a private placement expected to close within three months - the first of several anticipated rounds of financing. Peskin said the verticallend.com is different from other online loan companies like E-loan and Lendingtree.com in that it is not a referral service. Rather, it provides the necessary back office support such as credit checks and client screenings in order to write loans.

"We're also different because we are business-to-business," he said.

Analyst Jaime Punishill of Cambridge, Mass.-based Forrester Research, said he is not aware of any other firm doing something similar, at least in terms of offering these services to financial professionals.

Forrester predicts that by 2003 the online mortgage origination arena will, in its worst-case scenario, grow to a $100 billion niche. At best, the research firm projects its market to grow to $155 billion. That number does not include the other markets that the company wants to branch into.

The statements in this press release that are not historical facts are forward-looking statements based upon current expectations. Such forward-looking statements involve risks and uncertainties, including risks and uncertainties set forth in "Risk Factors" and elsewhere in BLC's Form 10-K filed with the Securities and Exchange Commission for the fiscal year ended June 30, 1999.

Mortgage Warehouse's director of business development Steven Connolly, a certified public accountant - has been able to get off the ground thanks to relaxed state trade regulations, which now allow CPAs to accept commissions. It has been further pushed along following changes in federal law that have virtually abolished the walls between the financial services.

With many accounting firms moving to accept commissions through the sale of insurance products and financial planning services, Mortgage Warehouse saw a window for the offering of residential mortgage loans. Professionals in the network can make up to $1,000 per loan, which is paid by Mortgage Warehouse. "Accountants need to accept commissions," said David Peskin, president of Mortgage Warehouse, one of the Island's top mortgage bankers. If not, "what happens is they are being cut out of the market" and are being cut off by others who take advantage of the new opportunities, he said. "The idea is for them to add additional services to their current client base."

Two months ago, the company started an online application process.

Now, with about 300 applications under its belt, $2 million a month in online mortgage originations and a network of 200 professionals (including 100 on Long Island) signed to one-year contracts, the company is set to expand its online B2B model to include auto commercial and small business loans in the coming months.

Jim Preston, owner of an accounting practice in Cutchogue in his name with 20 years experience, said he completed eight residential mortgage loans since June for Mortgage Warehouse. He said "clients tend to like" the fact that he can write a mortgage loan for them, since he already knows their financial background and they don't have to hand over an application to a loan officer they never met.

"There's a security factor because you are working with someone you know and trust," Peskin said. Preston, who has yet to complete an online application, said he would welcome the addition of other services to the program. However, Peskin admits that he has had trouble bringing on board the old-school accountants, who refuse to accept commissions as a matter of traditional ethical integrity. "When we first started, we were getting some friction in New York" from the older generation, he said. He added that the younger generation however, continues to look for ways increase numbers of services they provide.