Brighton's Premium Mortgage Corp. growing in a shrinking industry

Sean Dobbin
Staff writer

The Rochester Top 100, which annually recognizes the fastest-growing privately held companies in the nine-county region, is sponsored by the Rochester Business Alliance and KPMG. Here is an interview with Mike Donoghue, president of Premium Mortgage Corp.

This is your first time in the Top 100. How does it feel?

I don't feel any different. Am I supposed to?

Sure! It's pure ego gratification.

Ha, absolutely. Well, I think what's notable is, in an industry that's constricting drastically, we are growing.

We intentionally stayed away from refinances and sub-prime business because we knew it was a temporary income stream. The focus of our business is 100 percent on real estate agents and builders. That's where all of our business comes from.

How have you managed to grow in a shrinking industry?

It's interesting, and this is my personal observation, but you see all the news about the housing market being a mess, but you're not getting local stories. Most of these wire stories are a national trend, but if you look at Rochester, we've had year over year growth.

Did you know Rochester was named the No. 2 real estate market in the country by CNN?

No, I didn't. But I just bought a house, so I'm glad to hear it.

Well, it doesn't mean we're going to get double-digit appreciation. It means the rest of the country is getting depreciation.

In Florida, California, Arizona, Nevada, there's terrible problems, and I don't think they're going to get fixed any time soon. We actually do business in California, Florida, Connecticut, Massachusetts and New York, and our business in Florida is pretty nonexistent right now.

But in Rochester and in western New York, since we don't see these big peaks in real estate values, we don't see the dips, either. It's more of a steady, consistent climb.

How do you find customers?

Well, that's the trick, isn't it? I've been in the business for about 17 years — the bank I used to work for sold their mortgage division to M&T Bank in 1999 — and the first few years are just hitting the streets, trying to meet people, building relationships, and getting them to refer clients to you. Good business is not about making the most from every transaction. It's about making the most from every relationship.

What's the difference between a mortgage banker and a mortgage broker?

We're a mortgage banker, which means we make loans to people, then we securitize and sell those loans to banks. We're one of, I think, two or three mortgage bankers in town, whereas there's probably 50 mortgage brokers, and there's a significant difference.

If you go to a mortgage broker, they're arranging for you to get a mortgage through some third party. You come to us and we're actually lending you the money.

What distinguishes you from the big banks?

We pride ourselves on having extremely knowledgeable and talented people. The banks have gotten everything so homogenized that when a borrower walks in, they'll input their information into the system, and if the computer doesn't pop out an automatic approval, they're like, "I don't know what to do." It's like they're taking the kids working at McDonald's and making them into advisors.

A real estate transaction is probably one of the largest transactions a person's gonna enter into in their entire life. If someone buys a house for $300,000, the person that's sitting across from you is going to be giving you advice that's gonna affect you for the next 15, 20, or 30 years. And if it's not good advice, you're in trouble.

Can you compete with their rates?

We have over a 20 percent market share in Rochester, and you can actually get a better rate by coming to us than by going to the bank, so it's your more informed consumer that comes to us.

When you go to a bank and you apply for a mortgage, they're going to lock in your interest rate. Three weeks later, interest rates drop half a percent, and you go in and say, "Are you gonna give me a lower rate?" No.

But we're a mortgage banker and we don't care who we sell the loan to, so we'll give you the lower rate and sell it to a different person.

Are you looking to expand to other areas of New York?

We have two offices: one in Rochester and one in Buffalo. We're doing fine in New York, but the only market we see as attractive is the downstate market. Real estate prices in the New York City market never seem to go down. We used to have an office down there and we closed it, because the rent was ridiculous: It was like $22,000 a month.

But we advertise down there and try to get the business through the phone and e-mail and overnights, and we think we can save the consumer at least a couple thousand dollars on a transaction by working through us instead of a local person, because their costs are just so much higher than ours.

What else is important to you?

Community involvement is extremely important to us. I sit on a couple different charity boards, I'm a contributor to the Ten Ugly Men, and I started the Ugly Disco Bash. I'm involved with the Boys and Girls Club in the city, and ultimately we figure if we do the right thing in the community, it'll come back to us.

With the constant corporate consolidation that we're seeing in the world, if you're working with a national player, you're working with a company that's taking jobs out of Rochester. We've created jobs in Rochester.

How long have you lived here?

My entire life. I grew up in Brighton, graduated in 1987, and went to Nazareth College.

How else do you spend your free time?

Snowmobiling in the winter time. In the summer time, there's not much time out of work because that's our busy season. But I love to travel to the Caribbean when I get a chance: the Bahamas and Aruba are my two favorite spots. I've got a 14-year old daughter, and I have a little farm out in Rush that I spend my weekends at.

When you're hanging out with your daughter, what do you guys do?

Go to the mall. She loves to spend money.

And you like to lend it out. Sounds like a dangerous combination.

It sure is.

SDOBBIN@DemocratandChronicle.com