Fidelity First Financial Corp. Fidelity First Financial Corporation

Fidelity First Financial Corporation is a Maryland-based company that offers high loan to value loans to consumers. These loans, which can be in amounts up to 125 percent of the value of a residence, are designed to help consumers emerge from financially pressured situations in which their solvency is threatened. Because these loans are secured by properties which are not worth the combined value of the loans (the loans are typically written as a combination of first and second mortgages), consumers pay a premium in the form of higher interest rates than for conventional loans. However, these loans are often the last resort for consumers who need to reduce their monthly obligations.

Fidelity First has built its success by using a combination of technology and marketing to target its ideal customer. Direct mail and telemarketing are used extensively to cultivate leads which a highly trained sales force then seeks to close. In most cases, consumers are contacted by Fidelity First for the initial interaction rather than the other way around. Fidelity First competes with other mortgage lenders, including traditional financial institutions (banks and savings and loans) as well as companies that specialize in this type of loan.

This research examines the current position of Fidelity First, and considers the marketing strategy and focus that the company has developed to this point.

Analysis of Organizational Structure

Robert Posner, the chief executive offi

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pany is not particularly interested in homeowners who have paid down their mortgage to the point that they could qualify for conventional loans; these consumers are price-sensitive (price being the interest rate in this case) and represent a source of market share, but not of strong revenue potential. Instead, the company focuses its segmentation strategy on those consumers who are unable to qualify for conventional loans and who may be facing an acute solvency crisis. In many cases, consumers consider themselves on the brink of bankruptcy. Because the consolidation loans that Fidelity First offers can significantly reduce the monthly payments that these consumers make (by several hundred dollars in some cases), consumers are able to improve their cash flow and salvage their credit rating (Johnson 5A). Because Fidelity First targets middle class consumers who might otherwise prepay their loans (which results in lower long-term revenue for the company because of the loss of the higher interest rates), the high loan to value loans have a particular appeal. Consumers are effectively prevented from prepaying these loans because the combined balances exceeds the value of the house. This means that consumers must wait for the hous

Category: Economics - F