Deutsche Bank is committed to financing home equity lenders, despite the industry's recent problems.

Deutsche Bank North America handed FirstPlus Financial Corp. a $1.6 billion warehouse line on Monday, just days after an announcement about the possibility of an accounting restructuring caused the company's stock to fall more than 18% in less than a week.

The Deutsche Bank loan is a positive sign for home equity lenders, who have been plagued lately by skittish investors and unstable capital markets.

Although the sector has lost millions in equity due to falling stock prices in recent weeks, banks aren't turning lenders away.

The cost of capital debt for home equity lenders has gone up recently, said Jennifer Scutti, analyst with Prudential Securities. But few banks have stepped back from the market, she said.

Many home equity companies have revolving credit facilities backed by many banks.

But little information is available about which ones are the most active in the field because many banks do not disclose corporate lending activities by specific industry.

Deutsche Bank North America's investment banking affiliate, Deutsche Morgan Grenfell, is committed to establishing relationships with experienced players in the sector, said vice president Vijay Radhakishun.

During 1998, the company expects to be an active player in the home equity securitization market.

The terms of the FirstPlus deal were even favorable-FirstPlus secured the warehouse line at London interbank offered rate plus 0.5%, which is 50 basis points better than the company's best-priced facility.

FirstPlus' new, cheaper line will translate into stronger 1998 cash earnings, the company said.

The relationship with Deutsche Bank North America and Deutsche Morgan Grenfell should also enhance the company's ability to access the global capital markets, said FirstPlus chief executive Daniel T. Phillips in a written statement.

Deutsche Morgan Grenfell is hoping to use its global funding and securities underwriting platform to help FirstPlus expand its business in Europe, the bank said.

Mike Mayo, an analyst with Credit Suisse First Boston, recommended caution in lending to the sector.

"Banks need to be up-to-date on industries that are getting hit" in the stock market or elsewhere, he said.

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