Dave Smith Motors, the high-volume motor-vehicle dealership based in Kellogg, Idaho, has added home mortgages to its product mix.


The dealership has created a new department called Dave Smith Home Loans, which is operating in a 600-square-foot office in the main dealership building in Kellogg and in a second, 1,600-square-foot location above the service center at Dave Smith Frontier Sales, in Coeur dAlene, says Matt Smith, president of the new operation. Dave Smith Frontier Sales is a used-car outlet.


Matt Smith is a cousin of Ken and Eric Smith, the top executives at Dave Smith Motors. He had worked in the dealerships finance office for eight years and was the senior finance manager there before setting out four years ago to found Summa Financial LLC, a Post Falls home-mortgage business, with two other partners.


Now, hes once again associated with the vehicle dealership, although he also continues to arrange home loans there through Summa Financials licenses.


Matt Smith says auto sales are down nationally, including at Dave Smith Motors, but that had no bearing on the opening of the home-loan department.


Every dealership is going through lower sales than last year, he says, adding that Dave Smith Motors has continued to recruit salespeople despite the slowdown. The dealerships auto sales force isnt involved in arranging mortgages.


Smith says he approached Ken Smith about starting the home-loan unit.


Ken Smith is always looking for new avenues and businesses, he says. He was all for it.


Dave Smith Home Loans applies the high-volume car dealerships one-low-price, hassle-free buying philosophy to home loans, with the intent of making money through volume, he says.


We thought Dave Smith Motors has a nice captive audience, Smith says, referring to the dealerships reputation for comparatively low pricing.


As of Oct. 3, the lending operation was offering 30-year fixed-rate mortgage loans at an annual interest rate of 5.6 percent and 15-year fixed-rate mortgages at an annual rate of 5.25 percent. Smith says the brokerage charges a loan-origination fee of 1 percent for mortgages and mortgage refinancings and sells on the secondary market the mortgages it makes.


He says the three-month-old brokerage handled five loans in July and is now handling 20 to 30 loans a month.


I could see that doubling quickly, he says. Were exceeding goals.


The mortgage brokerage is licensed in Idaho and Washington and plans to start offering home loans to customers in Oregon and possibly Utah within six months, Smith says.


The Coeur dAlene-Spokane market is our main market right now, although we even do quite a bit in King County, he says.


Dave Smith Home Loans has four employees, including Smith, who anticipates hiring one or two more staff members soon for the department. Were getting closer to hiring on more people as volume grows, he says.


Smith says he often works with Spokane customers on their own turf.


Were pretty mobile, he says. Well meet with customers at their houses.


It makes arrangements over the phone and the Internet to serve customers in markets, such as west of the Cascades, that are farther away, Smith says.


As home prices have fallen around the country, its a challenging time to launch a mortgage brokerage, he says. He adds, however, that home values in the Inland Northwest have held up pretty well compared with other areas of the country.


Spokane and even Coeur dAlene is holding up, he says. A lot of people still have a lot of equity in their homes. It just depends on the neighborhood.


Most loans brokered through Dave Smith Home Loans have involved refinancings, Smith says. Were doing a lot of 30-year fixed mortgages for people who want to get out of their ARMs (adjustable-rate mortgages), he says.


Other car dealers have taken notice of the new Dave Smith endeavor, Smith says.


Weve had dealers contact us and ask, If Dave Smith is doing home loans, should I be doing home loans?


Meanwhile, Smith says there has been some talk of creating a real estate department at Dave Smith Motors.