Football legend Joe Namath signs on as pitchman for Vegas mortgage lender

Grace Leong

Thursday, Jan. 11, 2001 | 11:17 a.m.

Football legend Joe Namath guaranteed a New York Jets win against the heavily favored Baltimore Colts in the 1969 Super Bowl. Now he hopes to work the same magic for a fast-growing Las Vegas mortgage company.

Vestin Mortgage Inc. of Las Vegas, formerly Del Mar Mortgage Inc., said Wednesday it hired Namath as a $1 million-per-year spokesman.

Vestin's national growth plan, to be pushed along by ads featuring Namath, includes targeting investors in the fast-growing Sun Belt states including Florida, Texas, Arizona and California.

Vestin currently has 5,000 investors in Las Vegas and hopes to grow that number by 40-60 percent annually. Vestin, which has 36 employees in Las Vegas, Phoenix and San Diego, plans to add 20 more workers in Las Vegas.

Michael Shustek, Vestin's chief executive, explained the choice of Namath as national spokesman.

"We picked Namath because of his charisma. Besides, when he says something, it happens," he said.

"People know me and know what kind of person I am," Namath said.

Namath, who has promoted products ranging from pantyhose to facial cleansers to Coke and popcorn, quipped: "If we can get hockey, basketball, baseball, football, you name it, players to invest in Vestin ... Better yet, if we can get Alex Rodriguez (the highest paid player in baseball history) to invest, we won't need anyone else."

Namath Wednesday received his first $250,000 installment of a $1 million annual fee for his promotional efforts.

Steve Byrne, Vestin's president, said: "It's like hiring Michael Jordan to market Gatorade."

"Namath has a very high TV rating quotient. He's a sports icon and he is the right demographic for our market," Byrne said. "He's very well known in that age group, baby boomers and up. He's had some very successful endorsements in the past."

Vestin said it has rights to use Namath for its advertisements on radio, billboards, newspapers and television.

"We plan to start the ads within the next 45 days. Namath will talk about how Vestin invests, how the investors will get monthly interest checks and how they are secured," Shustek said.

Vestin uses its own resources and funds from private investors to make short-term loans to residential and commercial real estate developers and owners for land acquisition and development.

Vestin generates revenue by charging loan origination fees of 2 percent to 4 percent, charging administrative fees on its loans and by the spread between the interest rate it charges borrowers and the rate it pays investors.

The company says it can approve and fund a loan in 10 to 20 days vs. 30 to 120 days for conventional lenders -- which is why borrowers are willing to pay Vestin's higher interest rates.

For the third quarter of 2000, Vestin reported a profit of $1.1 million or 15 cents per share vs. $906,000 or 13 cents in the year-ago quarter. Revenue for the three months jumped 27 percent or $1 million, from $3.6 million to $4.6 million.

Besides this activity, Vestin is expanding into income-producing investments, financial consulting, corporate finance, Internet financial services, insurance and investment services.

Vestin said it has made more than $600 million in loans in the past three years and currently services $280 million in loans. "Del Mar has made loans on more than 4,500 pieces of property, and has facilitated more than $1 billion in transactions, all without a loss to any of its investors," the company said.

And what is the advantage of investing in mortgages, also called trust deeds?

"The interest you get on trust deeds or mortgages is better than a bank. The trust deeds aren't federally insured but you do have collateral and that collateral is the property. But the major question investors have to consider is whether the land value is there. Our portfolios are very carefully evaluated," said Vestin board member Robert Forbuss, a prominent Las Vegas businessman.

"Also we only lend to 60 percent of the land's appraised value. If someone can't pay the mortgage, the security is on the land. We don't put multiple deeds of trust on the property," Forbuss said.

With some potential investors, Vestin and Shustek may have to overcome lingering concerns by investors who have heard of scandals involving other mortgage lenders including the notorious Harley L. Harmon Mortgage Co. and Interstate Mortgage Group of Las Vegas. Vestin has also received its share of bad publicity.

Del Mar was seized by state regulators in February 1999 when the regulators alleged misconduct, including concealing information from investors. But the state quickly returned control of the company to Shustek in a settlement with Del Mar.

Under the settlement, Del Mar agreed to implement operating procedures intended to keep investors better informed regarding their investments and to resolve other operating concerns.

Shustek said the state overreacted in the wake of criticism it received in its handling of the Harley Harmon case in 1997.

"Vestin has been doing extraordinarily well, and the fact that people are putting more money in is a sign that their confidence is high. I've done my research and concluded that this is a solid company and people are getting their returns," said Forbuss.

Shustek said: "We've never lost the investors' confidence. Vestin's earnings are growing at 40-60 percent a year. No one ever lost a penny."

Byrne said the company will conduct seminars to educate investors about the differences between Vestin Mortgage and other mortgage lenders.

"Vestin is a publicly traded company. We have a lot of public scrutiny and our underwriting standards are stronger. We have assurances to our investors that we're managing their funds properly," he said.

"Namath has investigated Vestin and is an investor himself," added James Walsh, Namath's agent and a New York attorney.

"Namath can help Vestin by being a spotlight and lending credibility to the company. He's done his due diligence to warrant associating with Vestin. He's not just a for-hire spokesman," he said.