By Judith Kirkwood (Written: May, 1999)
Madison Business First (reprinted with permission)
 

Steve Jacobson's Madison-based Fairway Independent Mortgage Co. closed on $400 million in loans in 1998 -- a figure that is especially impressive given that Jacobson came dangerously close to committing "business suicide" when he responded to a family crisis two years ago. In September 1996, after more than a dozen years of working in the mortgage business in the Southwest, Jacobson opened his own mortgage company in Arlington, Texas.  Located inside the stadium where the Texas Rangers play, Fairway Mortgage Co. was a venture based on providing superior service. Jacobson invested $250,000 of his own money to meet HUD's net-worth requirement because he believed in himself and the people he had chosen to work with. A month later, Jacobson realized he would have to move back to Wisconsin. His father -- who lived in Pardeeville where Steve grew up -- had been diagnosed with liver disease.

"By October 1996 his condition was so serious that I began to make plans to move back in order to spend the time he might have left with him," says Jacobson.

Leaving his company in the hands of Joel Hammond, a childhood friend he had worked with in the mortgage industry for 11 years, Jacobson returned to Wisconsin in December 1996. Having been given only weeks to live, Darryll Jacobson, Steve's 59-year-old father, was given a reprieve of sorts when a liver became available on Christmas Eve and a 10-hour transplant operation was performed Christmas Day.

The surgery went well, but Darryll suffered brain damage as a result of the illness and surgery. Afterwards he couldn't walk, talk or eat by himself. Knowing he couldn't leave his family, Steve set a new course for the future. He opened a Madison branch of Fairway at 2810 Crossroads Drive in March 1997 and began acquiring branch businesses around the country.

In 1997 his company closed on $120 million in loans. By the end of 1998, Fairway had 21 branches -- in Minnesota, Arizona, Texas, Pennsylvania, Maryland, Mississippi, Indiana, Ohio and Wisconsin -- and had more than tripled its business.

"When I had to leave the new business in Texas and come out here in December 1996, I never would have dreamed we would have done this well," he says.

How did Jacobson build up his business -- particularly while under enormous stress?

"One loan at a time," he responds. "At one point during those first months, the company lost $35,000 in a month. Now the company closes 400 to 600 loans a month, about 25 a month in Madison. Word is spreading that we have good operations and a good system."

From the very beginning he hired people he knew and trusted. He went to school with Joel Hammond, who is still in charge of the Arlington Fairway office. Joel's father was Steve's high school basketball coach.

One of the first people he asked to help him get started was Scott Peters, chief financial officer of a real estate development company in Washington, D.C. and Steve's former roommate at the University of Wisconsin. Peters now oversees Fairway's accounting department.

The nine-person Madison office -- with a staff of five that administers all the branches and four who do loans to clients in Madison -- includes Dean Anderson, Steve's brother-in-law, who moved here with his family from Minneapolis. Jacobson chose to develop his business using the net-branch concept, a popular approach in the mortgage industry today. Each branch operates independently under a manager, with the administrative branch in Madison handling things like payroll, accounting and meeting federal regulatory requirements. Fairway charges a fee for services based on each branch's loan amounts.

"It's a bit riskier than being a loan officer in a bank, but it's a way for top producers to have no ceiling on what they can make." Jacobson feels immensely grateful that his business is prospering. "Our business has been mainly by referrals. We just treat people well and offer old-fashioned service. Plus our rates are very good." Jacobson's father died in February, but Jacobson at least knows that he did the best he could for his father.

"My dad has always been my best friend. Any son would have done the same thing."