PASADENA, Calif. - Countrywide Credit Industries may be one of the last of a vanishing breed: a large independent mortgage company. But its management is making sure it doesn't go the way of leisure suits and Lomas Financial Corp.
Independent mortgage companies are being bought out or pushed out of the home mortgage business by commercial banks eager to expand their role in residential lending.
But Angelo Mozilo, Countrywide's intrepid vice chairman, is confident that his company will not only survive but become a household name.
"When people think of hamburgers, they think of McDonald's. When people think mortgages, we want them to think of Countrywide," Mr. Mozilo said, though he concedes the recognition will not happen overnight. "It's a 20- year odyssey we are on."
And Countrywide has not only managed to remain independent, but has been the leading mortgage lender in the country since 1992.
As of August, the company serviced $126 billion of home loans, for now the largest servicing portfolio in the industry. And Countrywide continues to thrive in the current interest rate environment that favors fixed loans, the bread and butter of mortgage companies.
Though the merger wave now under way will create some mortgage companies larger than Countrywide, Mr. Mozilo says he is unfazed.
"When it all shakes out, consolidation will be good for us," he said. Sitting in a disarmingly relaxed manner in his ornate office, Mr. Mozilo offers his opinion on the future of the industry and Countrywide's role in it. "Larger companies will, over time, be responsible players because they have a lot of capital at risk," he said. When companies have more at stake, they will move away from irrational pricing, he said.
To ensure survival and prosperity, the company has mounted an aggressive advertising campaign. Countrywide advertises nationally on radio and started airing television advertisements in a limited number of markets in July. A float in the Rose Bowl parade for the fourth year will help keep the company in the public's mind, and a recently completed home page on the Internet will reach the high-tech population.
A brand name also means customers know what to expect from Countrywide, no matter what branch they walk into. The strategy was started by Gerald Baker, who led Countrywide's marketing and production before leaving a year ago to run Fleet Financial Group's mortgage unit.
Mr. Baker's resignation, though sudden, did not derail Countywide's drive for national recognition.
"I did commercials for a while," Mr. Mozilo said of the scramble immediately following Mr. Baker's departure from Countrywide. "You didn't hear them? Well, you missed some great ads," he said with characteristic bravura.
But there is more to being a survivor and staying ahead of the banks than name recognition. Even though the bank-owned units have large stores of capital behind them, Mr. Mozilo says Countrywide's solitary focus gives it an edge.
"Because the focus of our intellect is on a single product, we have a competitive advantage" over bank-owned competitors, he said.
When Countrywide, which Mr. Mozilo and David Loeb started in 1969, first entered the home lending scene, Lomas Financial Corp. was the only national lender. Their competitors dismissed the new company as having an overly ambitious name.
Mr. Mozilo proudly tells a story of the young company's arrogance and a prophetic advertisement it ran many years ago.
"We hit $100 million in servicing. The woman in charge of servicing said we should celebrate," Mr. Mozilo said.
"I said, let's get a cake. We took out an ad in the Los Angeles Times that said, 'Watch out Lomas, here we come,' with a cake with candles. It was a joke at the time," he said, chuckling.
Lomas, as it turned out, filed for Chapter 11 bankruptcy in October, and is now in the process of selling off its assets in bankruptcy court.
While Mr. Mozilo attributes the company's success to remaining focused on what it does best, he said he is interested in selling products other than mortgages, which is some of the value banks see in a mortgage unit. After a failed effort in April 1994 to sell mutual funds to Countrywide customers, Mr. Mozilo suggested it is time to try again.
"We are on a quest to find out how to leverage our customer relationships to selling other products. My sense is, it will be through an alliance with someone who does it well."
"People who just buy a home need appliances. They're not saving or investing. So we have to be patient and wait for our customers to mature. And then they'll know what we have," he said. To ensure regular contact with borrowers, Countrywide sends out quarterly statements rather than a 12-month coupon book once a year.
And Mr. Mozilo, 56, appears ready to wait. He said he has no immediate plans for retirement, early or otherwise. But he has stepped back from the everyday details of company operations, relinquishing those responsibilities to Stanford Kurland, president of Countrywide Funding Corp., the principal lending unit.
As the yin to Mr. Mozilo's yang, Mr. Kurland sits behind a desk in his spartan office, turning to his computer once or twice in an hour to check Countrywide's production numbers that day.
Obviously comfortable with technology and computers, Mr. Kurland said that how industry competitors make use of the available technology will determine their success.
"Businesses have to make the right decisions" about what technology to invest in, Mr. Kurland said. "Everyone will expand their use of technology. The industry needs a process to evaluate technology platforms and systems that turn out to be the winners, and try to avoid shiny new toys."
Mr. Kurland does have some idea of what technology is useful for originating loans and keeping costs down.
"The Internet is useful. Electronic gathering of credit information and appraisal information helps us reduce the cost to process loans. Telemarketing systems improve our ability to originate loans over the telephone," he said.
And while the world gets smaller through increasingly sophisticated computer communication, mortgage companies get larger.
Mr. Mozilo said he had no plans to be acquired or acquire another mortgage company.
"What would we buy? Leases on buildings, and employees who would probably sue us for firing them," he said.
Countrywide will continue to purchase servicing portfolios. The only other acquisition Countrywide would make, he said, is of a financial institution to handle the servicing assets. He also suggested an acquisition of or an alliance with a company that is a proven, quality originator of loans with less-than-prime credit quality.
So while banks may eventually tire of the mortgage industry, Countrywide, the survivor, will still be there.
And Countrywide is no more likely to face the fate of Lomas than the dapper Mr. Mozilo is to wear a leisure suit.