Home equity lenders, already having a banner year, are expecting this year's volume to top last years's by at least one-third. But the specialty lenders also worry about possible deterioration in the nation's economy.

Those were among key findings of a recent survey of home equity and subprime lenders by Home Equity News, a trade publication.

Slightly more than half the respondents said they were very worried or moderately worried about economic conditions. And a similar share said they expect a recession within 24 months.

High delinquency rates on credit cards, which have led to a $350 million provision for loan losses by Bank of New York, have soured investors on credit card-related stocks, and stocks of finance companies were caught up in a selloff as well.

A report by the Mortgage Bankers Association also said revised figures for the second half of last year showed delinquencies were much higher than previously believed. And economists are generally expecting further deterioration this year, a trend likely to be traced in the home equity and subprime sectors as well.

In the survey, two out of three respondents said they expect delinquencies to rise, though about half said the rise would be 20 basis points or less - a fairly moderate increase. Of the one in three that expect delinquencies to fall, all expected the drop to be five basis points or less.

The lenders also expressed some worries over an initiative by the Federal Home Loan Mortgage Corp. to funnel subprime loans into private conduits for securitization.

While about three-quarters of the lenders said they were not interested in joining the Freddie Mac program, about one in two said they thought the program could capture 10% to 15% of the market in two years or less.

In general, the lenders have little fear of new competition from banks or thrifts. They believe their principal competitors will continue to be finance companies and mortgage banks.

Many banks and thrifts have recently jumped into or expressed interest in the subprime and home equity markets. Established lenders, however, have been unperturbed, predicting the newcomers would soon fall by the wayside as the rigors of subprime underwriting and servicing trip them up.

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