A career that has spanned plenty of California earthquakes-both economic and literal-has made Joseph Harvey cautious. "I'm two years older than dirt," the 60-year-old Countrywide veteran joked. "I've seen everything that can and will happen."

As chief executive of Full Spectrum Lending, Countrywide Credit Industries' 17-month-old retail subprime lending arm, Mr. Harvey is taking his time to build what most observers believe will become a national powerhouse.

Doing the job right is more important than doing it quickly, says Mr. Harvey, who has headed Countrywide's debt collection operation and its wholesale division.

Other traditional lenders have made acquisitions to get into the retail subprime business. First Union Corp. of Charlotte, N.C., and KeyCorp of Cleveland both purchased well-known subprime companies. But Mr. Harvey has no plans to buy. "I can build it from scratch," he said.

Mr. Harvey, who has been with Countrywide for 12 years, may not be rushing, but the Full Spectrum unit is already making its mark. Last year, Countrywide securitized $1.553 billion in subprime loans, a substantial portion of them originated through Full Spectrum's retail channels.

The unit was started in September 1996 and had only three employees as recently as February 1997. It now has 267 employees and 30 offices in 17 states. Mr. Harvey plans to open 18 to 30 more offices this year.

B and C loans, including home equity lines of credit, account for about 6% of Countrywide's originations, according to chief executive Angelo Mozilo.

But Countrywide's prominence in the marketplace will help it become a major player in the subprime sector, Mr. Harvey said. "Saying your partner is Countrywide is like saying your father is a Rockefeller," he said.

And though the unit is growing quietly, analysts expect it to eventually overtake its competition. When asked which company they think will be the Countrywide of the subprime market in five years, analysts commonly respond, "Well ... Countrywide."

The subprime market, which was estimated at $200 billion in 1997, is highly fragmented, experts point out. Associates First Capital Corp., the largest lender in the business, has an extensive branch network, but it originated just a small fraction of that volume last year.

Banks and traditional lenders who have begun to make loans to borrowers with problem credit records are "going to bring legitimacy to the subprime arena," Mr. Harvey said. Competition among a growing number of players will shrink profit margins in the long run, but a stronger secondary market will emerge, he said.

Fannie Mae and Freddie Mac have entered the fray in the past year, a development that Mr. Harvey says he welcomes. "Competition is great. The company that does the best is going to make its mark."

The Full Spectrum unit's sales strategy is as down-to-earth as its chief. Customers who do not qualify for a traditional loan are told that Countrywide has a "sister company that may be able to help," Mr. Harvey said. "We don't want anyone to think we're trying to make them take out a higher-rate loan.'"

In addition to referrals from Countrywide, Full Spectrum is using telemarketers, direct mail, and links with real estate agents to originate loans. Eighty to 85% of the business is refinancings, he said.

Origination fees are limited to four points, well below the level that many old-school subprime companies charge. "We made a decision we don't want us to be the most aggressive with margins."

And the unit is advocating a user-friendly strategy. "We won't do a loan if its not going to help both us and the borrower."

The unit's target customer isn't that much different from every other Countrywide customer, Mr. Harvey said. "It's just your average guy who's had some problems."

Mr. Harvey's front-line experience when California's real estate market tanked a few years ago has made him conservative, he said. He managed Countrywide's collections department during the recession of 1992 and a subsequent earthquake, after which many borrowers were more than willing to give up their homes, even if it meant defaulting on mortgages.

"When you need the front-loader to pick up keys, that's no fun," he said.

Still, the unit recently began offering loans to D borrowers, or those with serious credit problems. "We have no thoughts of doing a lot of volume in that area," Mr. Harvey said. "We just wanted to offer the full menu-it's like McDonald's saying, 'We offer chicken now.'"

Mr. Harvey is building his employee base from the ground up, too. Rather than getting into bidding wars for originators and collectors with experience in subprime lending, Mr. Harvey is hiring and training college graduates.

"Turnover is not good," he said. "Our employees are a lot more loyal."

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