Young men idolize all sorts of people, but Chris Castoro's choice may be unique.

"Angelo Mozilo is my hero,' says the 32-year-old president of CFI Mortgage.

Mr. Castoro wants to build Florida-based CFI into a giant, well- respected lender, as Mr. Mozilo did with Countrywide Home Loans.

"There's still room for major independent lenders long term," said the kinetic Mr. Castoro. "It takes the right structure."

CFI is sprinting toward Mr. Castoro's goals by opening offices, hiring experienced executives, and strengthening crucial ties with Wall Street and warehouse lenders.

A native of Long Island, N.Y., Mr. Castoro first aspired to be an investment banker, but found Wall Street too limiting. "I didn't want to be just another part in someone else's deal," he said.

He left for Florida in the late 1980s, figuring the growing state had plenty of need for housing. After a stint as a mortgage broker he was staked by his father, Vincent C., to build a mortgage operation. The business grew into CFI, with the elder Mr. Castoro serving as chairman. Chris' brother, Vincent J., is a senior executive.

The West Palm Beach company will prove that entrepreneurial lenders can grow and thrive in a mortgage industry that is increasingly dominated by giants, Mr. Castoro said.

But CFI's push comes at a difficult time for mortgage lenders. The industry is at a crossroads, with many independent companies getting out or reducing their operations, squeezed by tighter margins. The field is increasingly dominated by bank-owned companies whose parents supply support through capital and systems.

Mr. Castoro said his solution is to aggressively recruit executives from some of the larger companies. A number of CFI's top managers were enticed with six-figure salaries and stock options that, if CFI succeeds, will make them millionaires. Mr. Castoro draws a $100,000 salary and holds considerable stock in the company.

The company has also been hiring salespeople and support staff, bringing its head count to about 200. At the same time, CFI has been spending heavily on origination and processing systems.

The outlays are in the millions and have caused a string of quarterly losses at CFI. Mr. Castoro said the spending is necessary to build an infrastructure for CFI to grow and produce consistent profits.

Industry analysts warn that the company had better allocate its resources carefully. The mortgage business remains promising and young companies "do need to spend to build a framework," said Gareth Plank, a mortgage analyst at UBS Securities, New York. "But they are up against some pretty formidable companies that are already deeply entrenched."

Displaying confidence in CFI, executives from lending units at Admiral Bank, Citizens Bank, Ocwen Financial, and Resource Bankshares have joined the company this year. Board members include a former adviser to President Reagan and a senior faculty member with the Mortgage Bankers Association's continuing education program.

"It's a deep roster," Mr. Castoro said. "We look for people who aren't afraid to do things differently" than a traditional mortgage bank.

Veteran mortgage executives who joined CFI said they like the company's approach, especially the opportunity it offers to tinker with tradition. "This is a very flexible environment," said chief operating officer Don "Dusty" Lashbrook, 44, who was with Barnett Mortgage Co. before joining CFI in April. As an example he cited CFI's program to boost fee income by partnering with businesses like appraisal and title companies. The company also does not cap its salespeople's commissions, an approach other lenders are often reluctant to take.

This year CFI should top $300 million of originations through retail and wholesale channels. The company will do about 75% of its business in conventional loans and 25% through a growing subprime channel.

"If there is something out there that is in demand and has respectable spreads, we will get into it," Mr. Castoro said. The approach has led CFI to the subprime market. But the company is pouring just as much energy into conventional lending, building relationships with Fannie Mae and Freddie Mac.

Mainstream lending through Fannie Mae and Freddie Mac will supply ballast as CFI chases opportunities, Mr. Castoro said.

The strategy could work, industry observers said. "Niche by niche there are opportunities to market superior products," said Gregory J. Bennett, president of Hamilton, Carter, Smith & Co., a mortgage advisory firm in Beverly Hills.

The key, Mr. Bennett said, is getting in quickly and when the market shows signs of cooling, finding another mortgage product or service to capitalize on.

CFI's strategy emphasizes courting the capital markets. The company went public this year, raising $4 million. Although small, the capitalization should heighten CFI's profile and make raising debt and obtaining credit easier, industry observers said. Indeed, soon after the offering, CFI landed a $50 million credit line from First Union Corp., a development that Mr. Castoro credits to the stock sale. "It's all about credibility and visibility in this business," he said.

It is clear that Mr. Castoro enjoys the visibility.

Although other family members are involved in the business, it's Chris Castoro who's making the connections in the mortgage industry. At a recent industry conference he heartily introduced himself to Mr. Mozilo and asked for advice. "He gave me 20 minutes of his time," Mr. Castoro said. "It was invaluable."

Indeed, other lenders are likely to be approached-and selectively emulated. For instance, CFI will follow Chase Manhattan Mortgage's lead of hosting annual get-togethers for correspondents and other customers. "What better way to find out what's on people's minds? Bring them in and ask them," Mr. Castoro said.

He also acknowledges making mistakes. Without mentioning names, he recalls a run-in with an industry giant that left an impression: "It doesn't always matter if you're right, you won't win if the other guy is bigger. He'll outspend you."

And despite careful prehiring scrutiny, some managers just don't work out. "Some of the greatest stories (in job interviews) are told by people who turn out to be no good," he said.

"Basically, I've learned to put my temper in my pocket, along with my ego," Mr. Castoro said. "We've put together a good team. You leave them in their areas of expertise and they will absolutely attack the business."

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