While a wide variety of mortgage lenders remain active sponsors, one sector is dramatically increasing the number, scope and size of its deals: companies that specialize in higher-risk loans to consumers with impaired or non-existent credit histories.

The segment is the fastest growing area of the mortgage industry: Sub-prime loan originations rose 25 percent per year from ’94 to ’03, outpacing the 17 percent annual rate of growth for prime mortgages, according to Federal Reserve data.

Growth is projected to continue as mortgage rates creep higher. When rates go up, fewer consumers qualify for standard loans and thus turn to sub-prime mortgages.

Industry growth has had a dual impact on sponsorship spending. On one hand, companies such as Argent Mortgage Co., Home123 Corp. and other specialty lenders have signed new deals to capitalize on increasing consumer demand for their products.

On the other, sub-prime category leader Ameriquest Mortgage Co.’s success at selling sub-prime loans has allowed the company to expand and become a full-service lender. Its deals are meant to demonstrate the company’s size and strength to potential buyers of its
conventional loan products.

To that end, Ameriquest, which amassed an estimated $30-million portfolio last year that included deals with MLB and the NFL, continues to sign significant partnerships, including an estimated $4 million to present the upcoming Rolling Stones’ U.S. tour and an estimated high six figures for an NHRA Top Fuel dragster.

Argent also has a new music deal. Argent Mortgage Orchestrated is a five-stop music series that pairs popular recording artists with symphony orchestras.

Home123, the retail lending subsidiary of the number two company in the sub-prime category, New Century Financial Corp., last month inked two-year official mortgage company status with NASCAR, a tie that builds on a new ’05 associate tie with a Nextel Cup entry fielded by Chip Ganassi Racing with Felix Sabates. The deal includes primary sponsorship for New Century with a Ganassi entry in the Grand Am Rolex Sports Car Series.

Activation Differs For Retail, Wholesale
Both Ameriquest and Argent are units of Ameriquest Capital Corp. Argent is a wholesale lender working through independent mortgage brokers, while Ameriquest Mortgage is a retail company that provides loans directly to consumers.

Ameriquest will generate leads by offering a Rolling Stones ticket giveaway supported by a national TV ad campaign and direct mail drop, said Christine Bunch, marketing manager-events/sponsorships.

A microsite housed on Ameriquest.com will serve as the main portal for the sweeps; the microsite also will offer free downloads of Rolling Stones songs.

The company already uses its sponsorship of pro sports teams and sanctioning bodies as platforms to generate leads, including a sweepstakes dangling a VIP trip to this year’s MLB All-Star Game. Ameriquest has branded kiosks at 13 stadiums, which it uses to identify handraisers through sweeps offering free house payments for one year.

Current deals include Ameriquest Field, home to the MLB Texas Rangers, and cosponsorship of the MLB Tampa Bay Devil Rays, NFL Seattle Seahawks, Coconut Grove Arts Festival and the Miami Int’l Boat Show.

Argent primarily sponsors to provide mortgage brokers and their clients and prospects a once-in-a-lifetime experience that includes meet-and-greets, autographed merchandise and other unique items.

Those efforts have generated positive feedback from brokers. “They walk away knowing who Argent is and what we can do for them. It’s an experience they are truly grateful for, and that helps build loyalty,” said Jeff Gillis, Argent’s executive vice president of operations.

The company also uses the ties to build exposure before consumers, which in turn helps brokers because people are more comfortable doing business with an established brand, Gillis added.

Launched in ’03, Argent’s portfolio includes the Indy Racing League, title of two IndyCar Series races, the series’ Team Rahal and a presenting tie to horse racing’s Belmont Stakes.

Tips For Pitching The Category
Below are ideas for properties interested in selling sponsorship to sub-prime lenders.

Tie-in causes. Sub-prime lenders often look for charitable tie-ins to help overcome negative perceptions that they are predatory lenders. Home123, for example, makes a donation to Driving Autism Awareness for each lap completed by the Nextel Cup team it sponsors.

Research bank ownership/upsell existing sponsors. A number of commercial banks have acquired sub-prime lenders over the past several years. HSBC Holdings plc acquired Household Int’l, Inc. in ’03, for example, while Citigroup purchased Associates First Capital Corp. in ’00.

Properties with bank sponsors that have sub-prime units should attempt to upsell them to include official mortgage status.