What does wall street have in common with America's farmers?

Well, not much, except that they are now linked by two programs that pool and securitize farm loans and sell them to investors.

Units of Prudential Securities and Travelers Corp. have separately teamed up with the Federal Agricultural Mortgage Corp. to offer bankers a means of pooling long-term, fixed-rate agricultural loans secured by real estate.

The insurers were certified by Farmer Mac years ago to start up such programs, but they have done so only recently.

The programs make it easier for individual banks and their borrowers to access capital markets through Farmer Mac, allowing them to better compete with Farm Credit System banks.

"Banks are now able to offer long-term, fixed-rate loans without having the interest rate risk on their books," said John M. Blanchfield, who manages the American Bankers Association's ag division. Participating bankers. will essentially act as loan originators, retaining loan servicing rights without setting aside the capital required for loans on their balance sheets.

The programs are a boon for banks with liquidity problems, proponents say. In addition to selling new loans to the companies, banks can sell existing loans while still collecting servicing fees.

Banks must qualify as originators for the two programs and must be stockholders of Farmer Mac. They also must adopt the uniform underwriting standards accepted by Farmer Mac.

Under a Travelers Realty Investment Co. program, bankers first get approval for loans from the insurer's field offices and simultaneously fund the loan and sell it to Travelers at closing.

The Hartford-based insurer then warehouses the loans until it has from $75 million to $100 million that it can securitize. So far the company has purchased roughly $50 million in loans from its six participating banks.

The Prudential Securities Secured Financing Corp. program has bankers shifting loans to regional subpoolers, or aggregators, who then send the loans on to offices of Equitable Agri-Business.

The Equitable Co. unit acts as Prudential's central servicer, reviewing credit underwriting and loan appraisals and performing billing and collection functions. Prudential has signed up seven banks and hopes to pool and securitize $40 million in loans this year.

Farmer Mac created by the 1987 Agricultural Credit Act, raises funds on the capital markets and purchases the loans from the program poolers. This allows bankers to compete on rates with Farm Credit banks, which also dip into capital markets for funds.

"We are going to the same market as the Farm Credit System," said Michael A. Martin, a Travelers vice president. "This should help banks compete with the Farm Credit System."

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