Scott A. McAfee could have been the head of the mortgage unit of the third-largest bank in the country.

Mr. McAfee was tapped to run BankAmerica Mortgage Corp. in 1992, after BankAmerica Corp. bought Security Pacific Corp., whose mortgage unit he led.

But he turned down the offer, took some time off, and then joined an escrow firm, Spring Mountain Group, as chief executive officer in 1993. Now Mr. McAfee is back in the mortgage business-in a big way. This year Spring Mountain and financier Leon Black's Apollo Advisors LP formed a partnership that acquired Weyerhaeuser Mortgage Co.

Running an independent company "is far more fun and far more exciting" than running a subsidiary of a large bank, Mr. McAfee said. "I'm more of an entrepreneur."

His company, now called WMC Mortgage, combines Weyerhaeuser's mortgage and insurance offerings with Spring Mountain's escrow services. Within the next two months, Mr. McAfee said, WMC will unveil appraisal and title insurance products. "There has been a tremendous reception among mortgage customers to get one-stop shopping," Mr. McAfee said.

WMC originates most of its loans through retail channels. The relationship with Apollo will give WMC the capital to finance future growth. "We are very aggressively pursuing small regional fill-in acquisitions for our company. We're looking at expanding our presence in the East Coast and the Midwest," Mr. McAfee said.

But investment bankers said Apollo is not usually a long-term investor. Many industry observers said they think WMC is increasing its focus on subprime lending, a more profitable but riskier area, so that Apollo can take the company public and cash out on its investment.

Mr. McAfee said a public offering is not in the company's immediate plans and brushed aside talk of WMC's leaving the conforming business entirely.

"We're not getting out of the A business. We're just doing a great job of growing our B paper business," he said.

WMC just completed its first securitization, issuing a $200 million senior subordinated security backed by subprime loans. Mr. McAfee said he met with officials from Standard & Poor's on Wednesday and will have similar meetings with other agencies.

"We invited the rating agencies to rate the bonds to show our focus is not to make a lot of money and cash out quickly," he said.

WMC Equity Services, the company's subprime division, originated $500 million in subprime loans last year. The company said it expected subprime loan volume to double in 1997.

Now it appears that WMC will fund more than $1 billion of subprime loans. Mr. McAfee would not estimate the company's subprime lending volume for the first half of the year, but he did say that WMC Equity Services originated $160 million in July and is expected to originate about $175 million this month. He added that by yearend the company is expected to originate more than $200 million in loans each month.

WMC still originates A loans, but it sold off most of its conforming servicing portfolio to First Nationwide in June, a move that spurred talk that the company planned to become a subprime lender exclusively.

Although WMC will service subprime loans, Mr. McAfee said WMC will continue to sell most of its servicing.

"Find me someone out there making money servicing $4 billion. We can't compare with the economics of First Nationwide, Norwest, Countrywide, or Chase," he said.

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