Aames Financial Corp. has hired an executive to head its rapidly growing wholesale originations of credit-impaired and home equity loans.

Mark E. Costello will join the Los Angeles lender this week as vice president of mortgage banking. He most recently was a vice president and general manager of wholesale lending at Advanta Mortgage Corp., San Diego.

Aames has had strong growth in wholesale lending in the last year and a half. Other financial services companies, such as the Money Store, have also ridden a wave of strong home loan originations to borrowers with credit blemishes. The wave started when the refinancing boom stalled last year.

Mr. Costello is the second Advanta executive to jump to another lender this month. Earlier, Gregory Bowcott signed on with CWM Mortgage Holding Corp. to head the Pasadena, Calif., conduit's credit-impaired wholesale operation.

Aames mainly makes credit-impaired first and second mortgages.

For the year ended last June 30, Aames bought only $19.7 million of loans with lesser credit quality. But in the succeeding six months, Aames bought $67.7 million worth.

Aames originated a total of $190.2 million for the year ended last June. It originated another $162.9 million through December.

Gary K. Judis, Aames' president, chairman, and chief executive, said Mr. Costello would oversee the company's continued growth in wholesale lending. Mr. Judis is trying to position the line of business, which now accounts for half of Aames' volume, as a national operation.

"The size of the market is so huge in ('B' to 'D' loans) that there is room for so many more Aameses," he said. "I don't think we have scratched the surface of our potential."

Aames' wholesale operation is now buying loans in 24 states. It has 29 branches in California, Arizona, Colorado, Nevada, and Oregon. It will open two branches in Washington within a few months.

"I am seeing a tremendous demand for this product, an overwhelming demand, far more than anyone can calculate," Mr. Judis said.

A sudden change in interest rates could undermine Aames' growth, he said, however. Meanwhile, the company's rapid expansion has sent its stock soaring 52% this year.

Mr. Judis said moving into major Midwest and East Coast cities would offer Aames its greatest challenge. He also said a key to the company's success would be its ability to hire talented upper-echelon executives.

"We are only limited by the quality of our people," he said.

But Jay Seigel, a senior analyst at Moody's Investors Service in New York, said the market for loans with "B" to "D" credit quality is growing more crowded.

Analysts are generally positive about Aames and its recent moves.

Jennifer Scutti, senior financial services analyst in equities research at Prudential Securities, New York, said Mr. Costello's hiring is a plus for Aames.

"I think it is just a sign of their commitment to grow this piece of business," she said.

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