With refinance volume gone, lenders are scraping for anything to fill up their pipelines. Right now, so-called B and C loans are it. The residential loans are made to individuals with weaker credit.

The number of companies seeking to buy them wholesale for securitization is growing fast. And this in turn has made the market even more attractive to lenders.

"Mortgage bankers need to find other ways to originate loans," said John T. Hayt, president and chief executive officer, Equicredit Corp., Jacksonville, Fla. "This B and C product is firmly adjunct to what they do, and I think many of them are starting to realize it."

The home-loan operation of Prudential Insurance Company of America is the latest mortgage bank to join the parade. The Clayton, Mo., lender formed a unit to originate and securitize mostly B-grade loans last month.

And last week, Equicredit announced the formation of a division to buy weak-credit loans from other originators.

Other recent entrants as conduits are American Residential Mortgage Co.; Countrywide Funding Corp.; Residential Funding Corp.; and Option One Mortgage Corp., a subsidiary of Plaza Home Mortgage.

As many as 30 lenders have joined the B and C conduit market in recent months.

"This is like the fast-food business before MacDonald's," said J. Terrell Brown, president and chief executive officer at United Companies Financial Corp., Baton Rouge, La.

Many more Wall Street investment banks, like Nomura Securities International Inc., are now securitizing the lesser-grade loans. That has paved the way for more lenders to make B and C loans, bankers say.

Ginger Mae, a United Companies Financial subsidiary, and Long Beach Bank, m California, are among the fastest growing operations in this lending province. An executive at Long Beach Bank said the number of B and C applications its NcNac wholesale program received was doubling each week.

But competition has begun to erode once-stellar profit margins. Lenders are now earning margins of about 200 to 500 basis points. That's down from 900 - and sometimes as much as 1,200 basis points.

No one is sure how large the B and C lending industry is. Estimates have ranged from a far-out $1 trillion to a more realistic $50 billion to $60 billion.

John Romeo, a Prudential vice president, said the lender expects its new conduit to originate $250 million to $300 million worth of B and C loans over the next 12 months.

If Arbor National Mortgage Inc., Westbury, N.Y., is any example, Prudential should keep its estimates conservative. Although she would not give exact figures, Cheryl E. Hoffman, senior vice president, said its year-old origination program "has not been as successful as we had hoped."

Ms. Hoffman attributed the disappointment to a reluctance by Arbor loan officers to originate the more-difficult loans.

Others say there are many details of B and C lending that must be learned.

"It takes a while to ramp up the business," said Mr. Brown at United Companies. "It just doesn't happen over night."

David A. Olson, a Columbia, Md., analyst and publisher, doubts there is as much of a market as mortgage bankers expect. Mr. Olson said B and C lending has experienced only 7% growth per year.

"The market is not going to double this year," he said. "It doesn't happen that way."

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