To understand why home lenders are suddenly dabbling in loans to the credit-impaired, home equity loans for up to 125% of home value, and even small-business loans, consider this:

The nation's pool of first-time homebuyers-typically households headed by 25- to 34-year-olds-is drying up. In 1996 there were 227,000 fewer than in the year before, as most baby boomers headed into their late 30s and 40s.

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