With the stock market volatile and housing in a slump, many wealthy individuals are looking to tap another kind of equity — the kind hanging on their walls. Specialists at banks and auction houses say that more of their clients recently are interested in borrowing against their art collections.

“We are seeing increased activity in art financing transactions,” a senior vice president in structured lending at U.S. Trust, John Arena, said. Some of his clients are borrowing in order to purchase more art, he said, or because they see opportunities in the stock market or, to a lesser degree, real estate.

“We have more inquiries, from a broader group of borrowers,” a senior banker at Emigrant Bank Fine Art Finance, Barbara Chu, said. “I think that that is a function of the overall market conditions.”

Select banks and the two major auction houses, Sotheby’s and Christie’s, have been offering art financing for a long time. But in recent years, as values in the art market have risen, more and more collectors have taken advantage of it.

“Art now is seen as a definite asset class which is traded,” Christie’s international commercial director, Caroline Sayan, said. “People are looking at their complete portfolios and thinking about how they can leverage what they have more effectively.”

“If you have $100 million on your walls, that’s equity you want access to,” an art lawyer, Ralph Lerner, said.

Loans can be structured in various ways. Banks, including U.S. Trust, Citigroup, and Emigrant Bank Fine Art Finance, offer both term loans (which come due at a specific date) and lines of credit, to clients including high net-worth individuals, galleries, trusts, and museums. They may loan against a specific work, several works, or a whole collection, generally up to 50% of the market value of the collateral.

U.S. Trust and Citigroup offer art financing more as a service to their private banking clients than as a major source of revenue. Emigrant Bank Fine Art Finance, which was founded in 2005 by a former president of the Related Companies, Andy Augenblick, is seeking a significant return on its lending. Ms. Chu, who previously worked in real estate finance, declined to say precisely what kind of returns the company gets, but described them as “much better” than what real estate lenders get.

The auction houses primarily offer consignor advances, although Sotheby’s also offers term loans and revolving lines of credit.

Because the auction business is seasonal, with major sales only in the spring and fall, many sellers want an advance on the value of their artwork. (An estate, for instance, may need to pay taxes.) Ms. Sayan said that Christie’s will typically advance between 30% and 50% of the low estimate of a consignment. The managing director of Sotheby’s Financial Services, Jan Prasens, said that Sotheby’s will typically advance between 50% and 60% of the low estimate, depending on the amount of risk involved.

In the case that a work fails to sell and the buyer can’t repay the loan, the auction house will either work with the client on a resale strategy, whether through a private sale or a future auction, or agree to accept other collateral or consignments, Mr. Prasens said.

The interest on the various types of loans Sotheby’s offers varies from prime plus 2% to prime plus 3%, which today would be from 7% to 8%.

Banks and auction houses do several things to protect their interest in the collateral and protect against fraud. They will often be named on the borrower’s insurance policy, so that they can recoup their interest if the collateral is stolen or damaged. They make UCC filings, so that, should the borrower try to sell the collateral or borrow against it again, a search will turn up the bank’s or auction house’s security interest.

Even with all their precautions, sometimes lenders will be left holding the bag. In 2001, the dealer Michel Cohen, who had done business with Sotheby’s for many years, fled the country with $10 million in outstanding loans to the auction house. (Mr. Cohen was later arrested in Brazil but escaped while awaiting extradition.) Mr. Prasens said that Sotheby’s was able to reduce its loss to a fraction of the original loan amount through a combination of recovery of assets and insurance.

Often, a collector who borrows against his art can keep it on his wall. In some circumstances, however, a bank or an auction house will want to take possession of the collateral. Ms. Chu said that Emigrant Bank Fine Art Finance will often take possession of jewelry, because it is valuable and highly portable. Both Emigrant Bank Fine Art Finance and Sotheby’s will often take possession of the collateral if either it or the borrower is out of the country, where it is harder to check on the collateral, and where, depending on the legal system, it may be harder to claim the collateral if the borrower defaults.

Like the private banks, Sotheby’s and Christie’s offer loans primarily as a service to clients and a way to bring in consignment business, not because they expect to earn substantial revenue on the interest income. In 2007, Sotheby’s had approximately $17 million in revenue from interest, but Mr. Prasens noted that did not reflect the volume of auction business that the financial services segment of the company brought in. (Because Christie’s is a privately held company, it does not report financial data.)

The volume of lending that Sotheby’s does has increased substantially in recent years. At the end of 2007, it had $176,380,000 loaned out, according to its balance sheet. At the end of 2004, it had only $92,291,000 in outstanding loans.

“The term loans [side] has grown in recent years, as art values have gone up,” Mr. Prasens said.

Meanwhile, Ms. Sayan said that, although Christie’s has not generally done loans separate from consignments, it is now considering it.

“We definitely are looking at that as a possible growth area,” she said.