Mortgage loans aren't typically a product advertised on television alongside acne creams or DVDs of the latest workout craze, but West Coast lender Paramount Equity Mortgage Inc. thinks the infomercial is the perfect tool to generate new leads.
On Monday, the lender announced that it has partnered with Santa Monica, Calif.-based Guthy-Renker LLC — known for its TV infomercials promoting the Proactiv line of acne treatment products and the Ultimate Edge with Tony Robbins motivational materials, among others — to help it expand its mortgage and consumer finance operations nationally.
Gunthy-Renker, which is taking an undisclosed though "significant" equity position in Paramount, will create commercials for the Sacramento, Calif., lender and provide it with infrastructure support, including IT and customer service operations.
"We've been a good regional player on the west coast with the products that we offer," said Hayes Barnard, founder and chief executive of Paramount Equity, during an interview Monday. "Our dream has always been to take the business national and create a national brand. Guthy-Renker was a natural fit. … They've just done such a great job positioning products and brands."
Since the company was founded in 2003, Paramount has spent about $50 million on marketing alone, Barnard said.
"We've learned enough to be dangerous," he said, referring to the company's marketing prowess. "But we just feel that with the sophistication of a company like Guthy-Renker, it really gives us a lot more marketing fuel to get us to another level."
Guthy-Renker plans to launch two-minute and 30-minute commercials for the company in the near future, touting its ability to close loans in as little as 10 days.
"What attracted Guthy-Renker to Paramount is the consolidation in the mortgage business," said Ben Van de Bunt, co-CEO of Guthy-Renker. "When you have that much business consolidated … history shows that opportunity follows."
Paramount currently has 273 employees, including 100 loan officers licensed to do business in nine states, operating out of four offices. The company anticipates hiring up to 150 additional employees in the next 12 months as it expands into three additional states. The company also operates an insurance division and an energy unit that sells solar panels to homeowners.
Since its founding, Paramount has closed 45,000 mortgages, or more than $8 billion of loans. On average, the company makes about 400 mortgage loans a month, Barnard said. About 60% of its business is Federal Housing Administration loans.
Despite infomercials' stigma of being cheesy, long-winded pitches that tend to attract a gullible clientele, the commercials for Paramount will be geared toward creditworthy borrowers, Guthy-Renker stressed.
"People who watch television are the same people [who] get mortgages from Bank of America and Wells Fargo," said Van de Bunt. "We can only save money for the people that have credit and the ability to take these loans."
