Excerpts from an interview with ALLIANCE Mortgage’s CEO Sean Saed

by Rob Rothe

One Friday afternoon I caught up with the CEO of Alliance Mortgage, the hottest web site on the Internet for mortgages that is gaining grounds on its rivals, who have gone public, and some others who are trying in the Internet medium. But the market is still fresh and there is lot happening these days. He was half an hour late, and his cell phone was still chirping when we sat down at a swanky spot near the San Francisco Airport overlooking the bay.The planes roared above our heads for landings as I ordered a Martini on the rocks, but this health conscious CEO mildly ordered a bottle of mineral water. I was amazed at his agility and energy, as I lugged in a few tough questions in the opening salvo, and here is part of the interesting conversation I had :

How did you come to form Alliance Mortgage ? what exactly is happening and why I should spend this time with you ?

A lot is happening here in the silicon valley. This whole place is going kubtz with Internet, not a week passes by when some IPO doesn’t flies out like a cannon ball. This is all about technology. Technology that is shaping the way we do things and will do in the future.We happen to be at ground zero here and exploding like a hydrogen bomb.These are heady time in the valley. Very heady indeed. People don’t even return phone calls anymore.

But you didn’t answer my previous question or you did ?

I am sorry I couldn’t finish. I get out of breath when I talk about the Internet and the revolution it has brought. Its not a only a revolution but its also a renaissance like in the middle ages in Europe. Please allow me to say that. Someday kids will be writing essays on it somewhere looping and somersaulting in awe. To answer your question I founded Alliance around 1992 and we did what a conventional mortgage company did at the time, we rolled in the refi boom and were laughing all the way to the bank like everybody else.

I read your press releases and you said what a battle tested company you have been and blah blah… is that a boast or what ?

Nothing is a boast. I will tell you like it is. Little I knew when Alliance Mortgage was born that we were going to have the worst recession in California for the next five years, and all the guys who started with me are either living in the Hillsborough mansions ( a wealthy San Francisco suburb) or pumping gas in downtown San Jose now, but I happen to be a guy who just eluded to have not achieved either of the status. We just kept it very steady. We did what survival calls for. We did poor credit history loans that no one used to touch than and we lived off that. No one knew the word sub prime back than. The A paper was non existent and A lenders were bailing out and shutting offices, and few were pumping gas somewhere. Well it got pretty ugly for sometime. I used to go to Realtor’s offices and found them locked up with mail outside and a scrawny cat sitting that my Realtor friend (she) left behind.Yes that was few years ago. It has not been that long and we all seem to forget those days in these heady times.Yes we are a battle hardened company that can survive than and it can survive now and make it anywhere, anyday, and compete with anyone and anywhere and we are just doing that.

You said you delivered Pizza ?

Yes. Tony’s pizza. I was going to school than.

I always wanted to tinker with the computers but I knew nothing about till I say 1993. I was a computer illiterate. I still am, because I hacked my way through it. I never had a formal education in it. But I was quick to learn and adapt, and when real estate recovered here in the Bay area in 1996 and 1997 we just went nuts. Amid all the skepticism we put up a 2 page web site in 1996 which didn’t even had its own URL ! and it was pretty amazing ! I knew if I can develop this into a viable method and duplicate it than we will be successful. I used to dream about that. So we grabbed this technology trend and for the first time found a way to reach the borrowers and the people directly on a large scale rather than through intermediatries, like Realtors, or banks or other conduits and brought some efficiency into the fragmented market place. It gave both of us a direct contact so we cut the middleman and the BS that goes along with it.

But how did you get technologically situated from Mortgage’s to this ?

Because I live in this beautiful place. I’ve spent all my adult working life around technology so it came to me or to us naturally. And with a mind bent upon innovations, and a desire to change a stinking and obsolete mortgage system, we started out to bring newer things on our own. Our Web site was a great leap into the unknown yet it worked as I see it now. People used to call me Mr. Einstein and Dr. science. My own friends would call me deluded and say that I am in the box all day, and think I have gone to the deep end. May be I have. But who cares ! (bangs the water bottle in mock anger but it spills on the table as a huge jumbo jet thunders its way above to land). Alliance was never behind anything. Two of these companies that are now public, were non existent than and they came behind us.Well you know what ? till venture capital got hold of them and lot of money was spent building a brand.But the truth is the customer always goes to where they get better rates and service. We are a service company.

How are you different than or Iown or Eloan or others who are out there ?

We have things in common but what we specialize is the impaired credit borrower. The middle America. The wage earning, tax paying people who have been classified as non payers thanks to our credit evaluation system designed by few credit vendors like equifax, experian and say trans union. They have no sympathy to the consumers and they work for the creditors so they founded these degrading systems, to degrade everyone one way or the other. We help those borrowers. We also help clean borrowers who have pristine credit. Some of these Internet companies can only do “clean credit”. You have to be the silicon valley type earning over sixty grands to do a loan with them. They have little room for you if you have don’t have perfect credit or if you’re not snowhite. Plus they don’t have the manpower or honed techniques or skills like us to do what we have been doing for 7 years.

We are direct lenders and that also means a lot. When a guy is talking to me on the phone he doesn’t realizes that the only thing he has to do is to go through my mind. And we don’t do car loans ! We are a straight ahead online mortgage company !

Now that I am a little clearer about your perspective let me ask you what’s in the future for the mortgage industry and what’s your company going to be doing ?

Well I am not a sorcerer. I don’t have the crystal ball yet (laughs) on the serious note according to Forrester research and Deutsche bank report the Internet based mortgages will be about 30 percent by the year 2003 and right now we are more than few a percents. So the market is huge. The funny thing is none of the players are having more than 10% share yet. Anyone who claims they have its not correct. There is a race to get onto the Internet by all those folks who have heard where the pot of the gold is and they are licking their chops ! Microsoft and Quicken became involved as a marketing arm for few lenders but Microsoft and Quicken never became mortgage bankers or brokers, and the lenders that they pass the marketed leads for a fee, don’t have the strength to stand alone and be competitive. They lack talent, computer geekiness, wizardry and an attitude. They are all woven from the same old school and they play their toll free numbers more than their URL in their ads.

We are positioning ourselves very much to gain the market share. We place our URL before our toll free number. We are not a high pressured telemarketed originator. We let the customers stroll through our garden and decide. Is that a better way ? you bet. I don’t care much about the interest rates, we care about the quality and market share. ! We did that back in 1994 an 1995 when Realtors left town and transients closed shops, and when our good friend Alan Greenspan raised the rates 6 times (the sneer on his face was almost comical). Our true roots and honesty will be recognized. We are here in the long run.You won’t find us doing car loans or become a pawn shop someday. We’ll always be mortgage company. We don’t have a venture capitalist here who’s looking out to move some stock and bail.

What advice will you give to others who want to join the Internet ?

Yesterday I was at the California Association of Mortgage Brokers (CAMB) dinner meeting when Chris Salazar editor of the Mortgage Originator magazine who assailed the Internet companies and the topic was ” How to go up against the Internet originator ‘ They are banding together like old housewives and whispering to each other. We got bashed too. Human beings don’t like change.When the airplane was invented by Wright brothers they felt the same stigma, and when the fax machine came people still used to deliver documents by hand ! and now with the Internet we have the same cultural resistance. My advice would be to shed all those fears and provide a great service to the public who is being overcharged and run over by the lenders and bankers and the usual conventional mortgage brokers types, who want to make a killing on every deal. Stop charging so much.

So branding a name on the Internet does not have any impact?

Well take a look at our website. Its branded. So are others. I am not a contranian.

Would you ever consider leaving the business someday when you’ve done it all say an IPO?

I am having too much fun to think about that. Too many exciting things are going on everyday. I may leave but when I feel its time to leave. I don’t think that time is anywhere near.Yeah we thought about an IPO but what are we going to achieve out of it is what we have to think through.No rush just a lot of thought. We’ve been talking with the underwriters.

Some of your art works appears on your web site did you do it ?

We don’t have any artwork on our web site. Nothing fancy, we kept it real simple and easy for everyone. I designed it, and our capable IT people put it together.We didn’t put any Java or the usual marquee running across, or a flashing toll free number or provided places to download Netscape or the Explorer …( laughs). We kept a lot of informative stuff. Stuff that you can’t get at a library or at a college or a seminar.Things you can reference back and make sharp choices.

Are you a web designer and a jack of all trades ?

No. I specialize in running the company.

What do you do for fun besides working 60 hr weeks ?

A lot. I am an athlete and I lift weights to stay in shape sitting down is not good for me.I travel .Sometimes I get this urge to hop on a plane now and meet this borrower in Texas or Florida.But now I am unable to do that.And I play with the computer a lot. Yeah I am a geek and an athlete.

Lastly what do you see as the future of Internet mortgages ?

Water always finds it way.I think in some years everybody will be on the Internet. Its growing rapidly. What we have in the regular market will mirror on the Internet to a certain degree as the ‘ old ships’ will rust out and retire in Palm beach or Costa Rica or in a sunny little lsland, and a new breed of laptop toting Internet connected, wireless modem guys under 30 come in. Its a generation thing you know. Old goes out new comes in.

At least I wish like John Lennon said and I don’t remember the song very well “Imagine all the people living in peace and the world will be one..I am a dreamer..hope you join us someday”. I am talking …about our fellows.. Correct me if I butchered those great lyrics.