Subprime Mortgage Lending Activities
As of January 1, 2007, New Century was the second-biggest subprime mortgage lender in the United States, and was headed by Brad Morrice, President and CEO. Frederic J. Forster, a lead independent director, served as a non-executive Chairman of the Board. Subprime mortgage loans are riskier loans in that they are made to borrowers unable to qualify under traditional, more stringent criteria due to a limited or blemished credit history. Subprime borrowers are generally defined as individuals with limited income or having FICO credit scores between 500 and 620 on a scale that ranges from 300 to 850. Subprime mortgage loans have a much higher rate of default than prime mortgage loans and are priced based on the risk assumed by the lender.
In marketing the company, New Century's Home123 Mortgage division engaged Bob Vila as an advertising spokesman for several years. It also entered into a sponsorship deal with NASCAR, as the Official Mortgage Company of NASCAR and sponsor the Chip Ganassi Racing with Felix Sabates team, in both the Cup and Busch series, appearing on the #42 race car driven by Jamie McMurray and #41 race car driven by Reed Sorenson. (McMurray has since left for Roush Fenway Racing and the #26 team.) They also sponsored a more niche NASCAR series and sportcar racer Cort Wagner.
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“The mortgage is still in our name but, increasingly, the house is theirs. One diaper, one vote.”
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—Bible: Hebrew, Deuteronomy 15:7,8.
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