The year 1998 will be a turning point for the subprime lending industry, analysts believe. And right now, few executives are looking like a survivor than James Moore.

The chief executive of New York-based Contifinancial Corp. has spent the year bracing his company against an impending storm: buying retail originators to improve profitability, allying with correspondents, carefully tracking and screening loans, revising assumptions, and moving Contifinancial toward a cash-positive balance sheet.

These moves should help Contifinancial, the third largest originator in the subprime business, avoid the various booby traps that other lenders are falling into, analysts say.

Retail originations and agreements with correspondents will keep prepayments low, they say. Higher-than-expected prepayments have already hacked equity from several of Contifinancial's peers.

For Mr. Moore, though, there is still one more test to pass-performance of the his new and potentially risky security, the Net Interest Margin transaction. The product allows investors to bet on his assumptions of loan performance. If they are right, the payoff is big. If not, Conti joins the subprime casualty list.

-Heather Timmons

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