Wall Street Watch

In one of the year's biggest mortgage securitizations, BankAmerica Corp. will package and sell $675 million of home loans.

The San Francisco company expects to complete the sale by mid-August.

Traders said the plan appears to mark the beginning of a program to help BankAmerica manage its mortgage growth; the company has not securitized mortgages in several years, they said.

"They're coming in with a bang," said one, who noted that mortgage securitizations typically average $300 million or less. Although most securitizations contain only new volume, BankAmerica's effort will include both seasoned and newer loans, making the package larger than usual.

The company, with $15.8 billion of production last year, has a lot of raw material to work with and is likely to continue to be a periodic issuer, an investment banker said.

A BankAmerica spokesman confirmed that a securitization is planned, saying BA Mortgage Securities will oversee packaging and Donaldson, Lufkin & Jenrette Securities Corp. will underwrite the deal. But the spokesman declined to elaborate, saying BankAmerica is in a regulatory "quiet period" that prohibits discussion of the deal.

With the issue, BankAmerica joins a growing group of mortgage lenders that have the muscle-in the form of capital and systems-to handle deals themselves. Most originators hold loans in their portfolio, sell them without securitization, or securitize through "conduits" that take a cut of proceeds.

By preparing deals themselves, lenders like BankAmerica, Norwest Mortgage, and Citicorp Mortgage can cut portfolio risk, build their names on Wall Street, and potentially squeeze out more fee income.

The loans that BankAmerica is offering carry fixed rates and were originated by several of the company's subsidiaries.

BankAmerica will issue the package through a "shelf registration," or statement of intent, sanctioned last fall by the Securities and Exchange Commission.

Under the registration, BankAmerica can issue up to $1 billion of securities before having to file another statement with the SEC.

State Street Global Advisors has created a fund that will invest in affordable housing loans.

"We've found it's an asset that makes a lot of sense from a risk-reward perspective," said H. Peter Norstrand, a vice president for real estate who oversees the fund. Returns should be at least 200 basis points higher than comparable Treasury securities, Mr. Norstrand said.

Two pension funds-run by Methodist and Lutheran church groups-have seeded the fund with $27 million. Other tax-exempt foundations and endowments have expressed interest in the fund, which is making its first investments this month, Mr. Norstrand said.

The fund will invest up to $100 million over the next three years in loans on residential properties in lower-income areas.

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