Everything in the subprime lending industry is more extreme than banking: Profit margins are larger, fees are steeper, collecting is harder - and regulations are much looser.
So it stands to reason that subprime executives would be a different breed. Leaders in the field tend to be self-made men and women, with backgrounds in everything from car sales to acting.
In the past two years, their industry has gained respectability in banking circles, and executives have been courted by analysts and investment firms. The influx of cash from Wall Street securitizations has made multimillionaires of many.
Despite being dragged into the mainstream, their renegade mindset hasn't changed. To hear them tell it, they are faster, leaner, and defter than bankers - and possess a competitive edge bankers never had.
Traditional mortgage lenders agree that subprime lending draws more entrepreneurial, less by-the-book executives.
"It's a high-risk, high-return market," says Paul Mondor, director of regulatory compliance for the Mortgage Bankers Association. "It stands to reason you'll have flashier types who worry less about bending the rules."
Laura Borrelli, president, National Home Equity Mortgage Association
"I love this business, because you get to use so much of your common sense," says Laura Borrelli, executive vice president at Residential Money Centers, Montvale, N.J. "It's more hands-on. People without MBAs are able to use their God-given talents to go forward."
Looking like Grace Kelly, with a hint of a New Jersey accent, Ms. Borrelli was the only woman at the industry conventions when she started in the business. Nineteen years later, she is president of the trade association.
As the first woman to fill the post, she views herself as the "transitional" party - not exactly one of the good ol' boys, but definitely one of the old guard.
"I answered an ad in the newspaper for a marketing person," she said about her first job in subprime lending 19 years ago with American Funding Ltd.
Since then, the former industrial plastics saleswoman covered a lot of ground in the subprime market - collections, underwriting, marketing and processing. "The best underwriters are female," she says. "Call it women's intuition."
Dan Phillips, chief
executive, FirstPlus Financial
This former Marine heads one of the fastest-growing companies in nonconforming lending. FirstPlus Financial, Dallas, makes loans that raise eyebrows even among normally fearless subprime executives.
The company made $1.18 billion in loans last year, the majority at or above a home's value. Its phenomenal growth has helped push the popularity of this hybrid of credit card and home loan, referred to as a 125% LTV loan.
Detractors worry that falling real estate values will leave these lenders holding worthless paper. But Mr. Phillips' attitude is strictly: No guts, no glory.
"Bankers are really accountants who make loans," Mr. Phillips said. "On this side of the industry, you eat what you kill."
Jay Botchman, entrepreneur
Jay Botchman has some simple advice for anyone who wants to learn about subprime mortgage lending: Talk to me.
"This may be my ego, but I know as much about the subprime mortgage industry as anyone in the country," he says. Mr. Botchman has been in the subprime loan market for more than 25 years, and along the way has drawn considerable legal and regulatory scrutiny.
Detractors make much of his stake in several restaurants owned by an alleged mobster, business dealings with investors with previous citations by the Securities and Exchange Commission, and former partnership with white collar criminal John Galanis.
His links with Cityscape Financial Corp. have pushed the stock down more than once, forcing him to sell his options for 4.14 million shares in late 1996.
But to peers in the subprime lending industry, does all that matter? His business sense, competitors grudgingly acknowledge, is tack sharp.
"Wow," says a thirtysomething accountant at the National Home Equity Mortgage Association convention in Maui, watching Mr. Botchman pass by at the opening luau there. "He's like the granddaddy of the industry."
Mr. Botchman's suspenders feature the New York City skyline, his long hair is worn in a ponytail, and all the chains around his neck are gold.
Industry newcomers flutter around him like moths, fighting to ask a question, offer a drink and maybe pick up a little of the wisdom that has helped make Mr. Botchman worth tens of millions of dollars.
Mr. Botchman laughs off any questions of improprieties. "Who told you that?" he says.
Jeff Larsen, president,
Most recently the head of Equicredit, Barnett Bank's subprime loan division, Mr. Larsen seems to embody the notion that you can't tame a finance executive.
The industry veteran left Equicredit abruptly earlier this year, leaving Barnett searching for a successor and peers scratching their heads. Mr. Larsen had been handpicked to lead the division after the retirement of longtime head John T. Hayt.
Neither Mr. Larsen nor Barnett would comment on the issue, but industry gossip sums up the story this way: Someone from the bank side tried to tell him what to do. The independent and entrepreneurial attitude of most finance company executives rarely meshes with the studied, careful attitude of a bank.
Less than a month after his departure, Mr. Larsen had founded First Street Mortgage Corp., San Diego - illustrating another finance company adage: be resilient.
Gary Judis, chief executive, Aames Financial Corp.
As the high-profile leader of one of the largest subprime lenders in the business, Mr. Judis is pushing to clean up the industry's image.
Last year, he co-founded Hello, an organization dedicated to expanding the public's knowledge of the industry and its presence on Capital Hill.
"I don't even like to refer to us as subprime anymore," he said of his Los Angeles-based company. Traditional mortgage bankers have a lot to fear from their subprime competitors, he said. "We've picked up an awful lot of A and B loan volume," he said. Banks "need to be aware that we're encroaching on their territory."