As Other Subprimes Turn Tail, Start-Up Aims to Be Top Dog

As others fled the crumbling subprime business, a former Finet chief operating officer saw opportunity.

Wayne S. Repich recently started Vanguard Acceptance Corp., a subprime wholesale mortgage bank in Carlsbad, Calif., that takes a less-than-somber approach to the business.

Mr. Repich, armed with the title of chief executive orchestrator, said Vanguard's timing, its focus on a small segment of borrowers-and its offbeat marketing approach-would separate it from the pack.

Mr. Repich said Vanguard's strategy for avoiding the fate that has befallen many other subprime lenders is a focus on a small but select client base.

"You can have 10 accounts rather than 50, but those 10 have to be good," Mr. Repich said. "You can't be walking in there acting desperate or acting like there is a crisis all the time. Your attitude has to be one of confidence and one of calmness" in an industry that is not known for those qualities.

"I used to get looks of astonishment from people who were just laughing when I wanted to start a subprime business," Mr. Repich said. "I said, 'You guys are missing the boat, this is a perfect time.' The market turned ugly and lenders were starting to go under, and the ones that did not go bankrupt suffered severe impacts."

Mr. Repich said that cutbacks in commissions, underwriting, and marketing dollars created a window for entry into the business as a new player.

"You could not have asked for a better thing to have happened. It was a perfect time to go in," Mr. Repich said.

The company's novel marketing approach includes a cocker spaniel mascot, Bosco, that serves as an honorary chief underwriter. Each approved loan is stamped with Vanguard's Golden Paw Award.

The company's lobby has a floor-to-ceiling glass wall that brokers, borrowers, and "canine friends" are supposed to sign.

The bank officially opened in February, and Mr. Repich said it had funded "a few million" in subprime loans, with another $5 million to $6 million in its pipeline.

Vanguard funds loans on their way to the secondary market through a warehouse line of credit from Provident Consumer Financial Services in Cincinnati.

Though the company would not disclose the amount of the secured line, Mr. Repich said, "We are able to do about $10 million in subprime loans a month."

Mr. Repich said he is looking to expand to Hawaii this year but has no plans for growth beyond that.

"I think Hawaii is a perfect opportunity, because the market is depressed and is just now starting to turn the corner. A lot of the big players have pulled out," Mr. Repich said. "So it is another one of those contrarian moves. But I find opportunity where everybody else is saying, 'God, this is terrible.'"

He added that rather than expanding to a third state, tentative plans were being made for a move into New Zealand and the Philippines.

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