From show biz to the mortgage biz.

From show biz to the mortgage biz

If Gary Judis were to teach a business class on his management techniques, it might be entitled "Management using the right side of the brain."

Quoth Judis, an avid pianist and composer: "Any successful executive does himself true justice when he tries to create harmony from dissonance. There needs to be a cohesiveness and people need to work ensemble. They must see it as not just a job but a creation."

Judis is not a mystic from the Himalayas but a mortgage brokerage czar who has built his company, Mid-Wilshire-based Aames Financial Corp., into the largest brokerage in the state, with "about" $18 million to $20 million in gross revenues in fiscal 1989.

Despite the current real estate slowdown, Aames is entering the 1990s with booming growth, Judis says. "Aames is having a banner year. Our foreclosure rate has not gone up one whit from last year."

Loan volume in 1989 was $100 million, compared to $80 million in 1988, he says. He expects $130 million to $135 million in loan volume for fiscal 1990, with business benefitting from the departure of many S&Ls from the home equity loan market.

Part of the company's growth is attributable to its aggressive and creative marketing. Judis, in fact, pioneered the use of mass media advertising by brokerages, using name advertising agencies like Chiat/Day - now Chiat/Day/Mojo - to produce slick television and radio ads and catchy slogans.

Judis says he raised production standards and transformed simple on air appearance by brokers into complicated story concepts in the early 1970s, when he was still president of Capitol Home Loan, which he founded in 1966.

Communication has always been a forte for Judis. You might guess his creative background from the almost theatrical hand gestures which salt and pepper Judis' discussions, which themselves tend toward soliloquies.

"I was programmed early in life to feel that my ultimate goal would be artistic," says Judis, who grew up in the tough West Adams section of Los Angeles, the son of a business-minded mother and a jeweler who taught himself to play piano.

After studying with the Jeff Corey Group, one of the most prestigious theater training groups in the country, Judis co-founded the Company of the Angels Repertory Theater at age 20. The group was not chopped liver. Other members included actors Sally Kellerman, Vic Tayback, Richard Chamberlain, and Leonard Nimoy.

And Judis did work, on television and stage and in films. At 18, he starred in a theatrical movie, "Killer's Cage." He was Pepe, the younger brother of a very beautiful girl. In the film, his character was "justifiably killed by a presumed mafioso who was there to apprehend his brother-in-law, who was testifying against a mafia kingpin. I loved getting killed and I died magnificently," he recalls.

But Judis had no burning desire to be a star. "Being an actor was a way to subsidize myself and travel. And a way to get women. Out of the service (where he had spent one year in the Air Force), I realized my head was elsewhere." Judis decided to leave acting and find an environment in which he would have more control.

Gary Judis remembers well when he received vocational enlightenment. It was one warm summer afternoon just before being discharged from Air Force in 1962. Driving his 1960 Ford Thunderbird along Wilshire Boulevard from Beverly Hills toward downtown, he sized up the business environment by the buildings.

"I realized that all the big buildings were owned by banks, life insurance companies and S&Ls. They were the wealthiest corporate entities in the world."

That appealed to compact, cherub-faced Judis. "I had to be the captain of something. I didn't want to be controlled by influences."

Something turned out to be the mortgage brokerage business.

Mortgage brokers find homeowners seeking loans based on their homes' equity and investors who get paid top dollar to provide the money. The brokers are paid a commission by the homeowners.

It was difficult for a 23-year-old with no background in finance to start a savings and loan, bank or insurance company. Not so, a mortgage brokerage. Although he was still involved with a watch repair business he had started with uncle Al Judis until 1964, he began investigating the mortgage brokerage business. Then after two years of working for a mortgage brokerage, Judis set out to co-found Capitol Home Loan.

In 1979, Capitol, which by then had nine branches, merged with Aames Home Loan to become the largest mortgage brokerage in California.

In September 1990, Aames Home Loan changed its name to Aames Financial Corp. in a move designed to underscore the company's expansion nonbrokerage activities such as institutional trust loans, first deed loans, Fannie Mae mortgages and longer term equity loans.

While acting fell by the wayside as he turned to a business career, music continues to be an important part of Judis' life. He now regularly pounds out everything from Bach to the Beatles, and composes.

An avid reader, Judis' interests range from history to economics to science fiction. "It's a great forecaster of the future," says Judis of the works of sci-fi giant Isaac Asimov and others.

He is also recently read John Jakes' "California Gold," a historical novel which Judis says provides excellent information about the evolution of the California economy.

Such books have been his college education, says Judis, who dropped out of Los Angeles City College.

"One day in sociology class I asked myself, 'Gary Judis, why are you here?' And I answered myself, `You're wasting your time. You know all you need to do what you need to do; now go out and do it.'

"That day I left; I left in the middle of sociology class," says Judis, who had been studying speech, sociology and English.

Another passion of Judis' is body building. He works out three times a week with father Harry. The elder Judis, 76, benchpresses 220 pounds on a Nautilus machine; son Gary, 52, benches 300 pounds.

Besides his parents, Judis cites two other people who have been formative in his life. The late John Sykes, chief executive of Aames Home Loan before it merged with Capitol, is one.

The two men had been fierce rivals: "John was looking to wind down and it was easier to join me than to fight me. He had me up his back each day. I was killing him," Judis says.

Despite that, he says, "He was a tremendous gentleman and he was very bright. . . . He taught me about simplicity and why simple things work best."

Another influential individual was Berry Gordy, founder of Motown Records.

Gordy contacted Judis in 1969 to hire him to evaluate properties. Judis replied that neither he nor his business was for sale at any price.

"We both have Napoleonic complexes," says Judis, who, like Gordy, is five-feet seven-inches tall.

Gordy then asked for Judis' advice in buying a radio studio. "By sheer coincidence I knew the people selling the studio and I knew it was a real dog. So I called up (the sellers) and said, `What are you trying to do, sandbag this guy?!' It impressed the hell out of him (Gordy)."

The two became fast friends, with Judis acting as an advisor on retainer to the media mogul until 1985.

Despite Aames Financial's growth, Judis admits to some setbacks. Underestimating the early 1980s real estate slowdown was one, he said. Loan volume fell off by 30 percent from 1982 to 1985 and compelled Judis to close nine branches. In addition, the percentage of foreclosed properties handled by Aames - which Judis says was less than 1 percent at its worst - went up significantly.

"It was a great test for quality of portfolio," he says.

In response to the slowdown, Aames diversified its revenue sources by beginning to broker loans to institutions and to offer clients realty services, analyzed the performance of its branches and operational components and took a closer look at the demographics of its borrowers, says Judis.

An ongoing Judis battle has been to professionalize the mortgage brokerage industry. It has often been viewed as less than reputable by executives of institutions with federally insured deposits like banks and S&Ls.

In the old days, they were right, admits Judis. Mortgage brokerage firms he encountered when starting out "were apathetic, asleep at the wheel," he says. For instance, many charged late fees as large as 1 percent of a loan's face value if a payment was delinquent by even a single day.

In 1973, Judis formed the California Independent Mortgage Brokers Association to set standards for the industry and lobby for its interests. Judis headed the institution, which now has nearly 130 members throughout the state, from 1973 to 1983.

One of the organization's biggest coups was successfully lobbying for the passage of a 1979 proposition exempting mortgage brokers and other real estate brokers from a usury law which put a 10 percent ceiling on interest they could charge for a loan.

In the year following the proposition's passage, Aames registered a nearly 50 percent increase in loan volume.

While the bottom line is an important goal, it is not the only goal, Judis says. "The guy who feels the best is the wealthiest. I learned early that the greatest asset is relationships," says Judis, who says he demands "complete commitment and loyalty" from his friends.

Judis is also a strong believer in self-reliance, which he believes has largely disappeared from the American character. "In a laissez-faire society like this one, it's easier to presume everything is OK," he says. "We are masters of denial in this country. We should be developing self-reliance, thinking `what happens if this falls through?.'"

That spills over into his business. There is risk in the mortgage brokerage business, Judis says. There are shady mortgage brokers; investors face the fact that many loan seekers are high-risk candidates who cannot get loans elsewhere; and loan seekers risk losing their homes if they cannot make payments.

But that risk can be managed, he says.

An executive at another of the largest home equity lenders nationwide praised Judis. "To my knowledge, it's a very good operation," said Robert Benson, vice president of California residential lending operations of The Money Store. "I think he does a good job at what he does. He has a lot of marketing expertise."

Aames has expanded rapidly, especially since acquiring Union Home Loan of Los Angeles' Northern California branches in 1984 and starting up additional Aames offices in Northern California.

Now Aames is considering expanding further throughout California, boosting its branches in the state from 16 to "30-35," and into Washington and Oregon.

The S&L - and now bank - crises have narrowed the credibility gap between banks and S&Ls on one hand and mortgage brokers on the other, says Judis.

"The mortgage brokers used to have the black eyes," says Judis, sitting in what used to be the executive office of S&L giant Home Savings of America.

"Now," he says with a smile, "that place is predominantly occupied by S&Ls and securities brokers."