Gary Coleman, as the story goes, rung up Cashcall Inc. in Irvine about a loan and wound up as its TV pitchman.
Now Cashcall spends about $18 million a year on ads centered around Coleman, who starred in “Diff’rent Strokes” in the late 1970s and early ’80s.
The company, which of-fers loans quickly over the phone or online, has $100 million a year in sales, according to owner John Paul Reddam.
“I keep expanding the advertising budget, and advertising drives sales,” he said.
Reddam, who created and sold Costa Mesa-based Ditech.com in the 1990s, is readying to move Cashcall to a 100,000-square-foot building in Fountain Valley in September.
The lender’s 300 workers are set to move into the first two stories of the building on Brookhurst Street next month, leaving about 25,000 square feet of space at 1920 Main St. in Irvine.
Cashcall plans to take a third story in Fountain Valley in a year, if not sooner, for a total of 100,333 square feet. The lease is valued at about $13 million.
Jay Carnahan of Costa Mesa’s Orion Property Partners Inc. represented Cashcall in the lease. John Harty of Trammel Crow Co. represented landlord Arden Realty Inc. of Los Angeles.
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Cashcall’s Fountain Valley building: leased more than 100,000 square feet |
Employment at Cashcall has doubled in the past year from about 150 people, Reddam said. Cashcall adds workers every month, he said.
Coleman’s pitches for Cashcall have become as much a staple of daytime TV as the frustrated loan officer who keeps losing customers to Ditech.com, now part of GMAC Mortgage Corp.
The diminutive Coleman originally borrowed money from Cashcall and paid it off by appearing in ads, according to Reddam.
The company makes loans that aren’t backed by a home, car or anything else. Its ads say money can be wired in a day to a borrower’s bank account.
The loans are pricey,interest rates start at 18%, Reddam said.
Rates are high because the risk of lending without collateral is greater, said Reddam, who also owns racehorses.
“It’s a risky play,” he said. “The last chapters haven’t been written yet. We don’t know how this will perform in an economic downturn.”
Loan amounts range from $2,600 to $20,000, up from a previous cap of $10,000, he said.
Besides advertising, writing off bad loans is Cashcall’s biggest expense, Reddam said.
Reddam said he started out funding Cashcall’s loans with his own money. Now Wall Street investors put up the cash and take part of the interest income, he said.
Reddam has a history with Wall Street and risky loans. In the 1990s, when he still owned Ditech, the company made second loans not backed by a homeowner’s equity.
The mortgages, which went up to 125% of a home’s value, were popular with investors for their high yields. Then interest rates dipped in the late 1990s, leading many borrowers to refinance and close their equity loans,and the profitable income streams they generated.
Reddam refocused on more traditional loans and then sold the company to General Motors Corp.’s GMAC, staying on as chief executive. He resigned in 2000 on the same day the FBI arrested three Ditech executives on extortion charges. Reddam never was charged with wrongdoing.
Since selling Ditech, Reddam has spent millions on racehorses, including Elloluv and Ten Most Wanted, which have won some big races.
Cashcall grew out of another company Reddam founded, Relantis, which bought homes from urgent sellers, fixed them up and sold them.
Relantis didn’t work out because he didn’t invest much time in the operation, Reddam said in an interview last year. The hot housing market likely didn’t help his cause, with some homes selling quickly even if they needed improvements.
