Late last year, the future looked bleak for employees of Center Credit, a small nonconforming-mortgage company in Richmond, Va.

Its Connecticut-based parent, Center Financial Corp., had been acquired by First Union Corp., and the unit just didn't fit into the Charlotte, N.C., bank's game plan, said Center Credit's top executive, Mike Lynch. He was slated to be dismissed in December, along with rest of the unit's employees.

But by Jan. 2, almost all of Center Credit's ex-employees - about a dozen - had been hired by Inland Mortgage Corp., to lead the Indianapolis- based mortgage company's foray into B and C lending.

In a move Mr. Lynch termed "self-serving survival," he and his top lieutenant, Reggie Manley, shopped the unit's personnel around until they found a good fit. "When one goes through an acquisition, you have a responsibility for the people who work for you," Mr. Lynch said.

The new unit, which will also be based in Richmond, will initially originate loans through Inland's existing mortgage platforms, and eventually combine that approach with its own retail and wholesale networks. The unit's stand-alone origination tactics will center on alternatives to brick and mortar branches, including telemarketing, Mr. Lynch said.

"We're taking the strategy and the people that executed it (from Center) and just plugging it into Inland Mortgage," said Mr. Lynch, now a senior vice president at Inland.

Mr. Lynch expects the new Inland division to originate at least $100 million in B and C loans in 1997. Ultimately the unit will securitize most of the loans it generates and retain the servicing, he said.

This represents Inland Mortgage's first step into the hot area of nonconventional lending, where ballooning loan volumes and high profit margins have attracted several conventional mortgage lenders in recent months.

Inland generates loans through over 90 retail offices, and through its relationships with more than 1,000 brokers. In 1996, the company's originations reached $5 billion, placing it among the top 30 mortgage originators.

Experienced personnel are the key to running a successful nonconventional lending division, Mr. Lynch said.

Inland's parent company, Irwin Financial in Columbus, Ind., operates several nonconventional mortgage lending divisions, including Irwin Home Equity, a high-loan-to-value lender in San Ramon, Calif.

By February, Inland's new unit expects to be fully operational. But for the moment, Mr. Lynch said, he is engrossed in setting up the division's new offices and moving his family from Connecticut - he had run Center Credit from the parent company's headquarters. "It's a little like running around with your hair on fire," he said.

First Union merged Centerbank, Center Financial's banking subsidiary, with its existing branches in Connecticut, forming First Union Bank of Connecticut, with 111 branches and $6.7 billion of assets.

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