WITH VOLUME SHRINKING, the home-loan industry has rushed to prop up volume - and dwindling margins - with a variety of new or recycled products: subprime loans; 125% loan-to-value models; reverse mortgages; "grandparent" loans, and an array of hybrids between fixed and adjustable rates. Are the niche markets here to stay? Individual profitability is the key. Page 2A


'B' AND 'C' SUBPRIME LOANS, higher-rate mortgages to borrowers with less than stellar credit histories, drummed up $90 billion of $796 billion of originations in '95 - and the pace is rising. The loans are helping mortgage bankers reinvigorate lending programs challenged by lackluster margins. Page 7A


GET READY for reverse mortgages, which provide monthly payments to mostly older homeowners. New players and demographic shifts - along with a big helping hand from Fannie Mae - are expected to speed the product's development. Page 14A


MORTGAGE LENDERS, with profits squeezed by relatively slack volume in the last two years, have been scrambling to beef up their menus - reviving old products, expanding their marketing of reverse mortgages, and putting new emphasis on home-equity loans and subprime credit. The experts give their views. Page 10A


IF YOU'RE A NEW mortgage company in town, you'll likely find it difficult to form a relationship with local builders - chances are other lenders are already on their sites. One lender says you must convince the site agent: "I have ways to help you sell more." Page 15A


ONE OF THE FASTEST segments of the mortgage business is "affinity" lending - a cheap and efficient way to market loans by soliciting members of non-profits, trade groups, or other big-member organizations. Several major banks have set up affinity lending operations hoping to mimic the success of PHH Mortgage Services, Mt. Laurel, N.J. Page 4A


RIVALRY-PRESSED LENDERS are shedding their hands-off style and aggressively marketing mortgages directly to potential customers who qualify both for low-risk and high-risk loans. They're using mail, telemarketing, and the Internet. The direct-marketing boom is lessening reliance on realtors, builders, and brokers. Page 6A


LARGE MORTGAGE COMPANIES, reeling from the sudden contraction of the mortgage market in 1994, have turned to home-equity loans in a big way. Much of the new lending has been to borrowers with impaired credit histories. The 50% jump in securities backed by such loans in '95 reflect a bid by some big mortgage concerns to offset first-mortgage cycles. Page 8A


MOST MORTGAGE BANKERS are stepping gingerly onto the Internet. They're largely waiting to see what others are doing before they dive in. Lenders are advised to use a "home page" as part of a strategy to generate leads and name recognition. Page 12A

WARNING: Getting on the Internet is easy; getting what you want isn't. Example: A search for anything with the word "mortgage" came up with so many reference that it would have taken hours to look at all of them. A tip or two (inside) may help. Page 13A

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