Alex. Brown, the midsize investment banking house based in Baltimore, is taking the plunge into mortgage securities underwriting.

The firm has hired several people for its taxable fixed-income group, according to the division's head, Frank Jamison, and is looking to add up to five more.

"We plan on being in most sectors of the taxable market," in the asset- backed as well as the commercial area, Mr. Jamison said.

The company is planning to provide investment banking services in the fixed-income area to all its corporate clients, he said. Alex. Brown counts Equicredit Corp. and Centura Banks Inc. among its finance clients. "That's where we see opportunities in the business," Mr. Jamison said.

Bond distribution is a growing business, especially in Europe, said Raphael Soifer, an analyst with Brown Brothers Harriman. "Banks there have just woke up to the fact that they don't have to hold everything on their balance sheets," he said.

According to several sources, Alex. Brown was considering an attempt to lure Cityscape Financial Corp. away from its securitizer, Greenwich Capital Corp. Cityscape, an Elmsford, N.Y.-based home equity lender, purchased a home loan company in England this year.

But Cityscape is not planning to work with Alex. Brown, according to Rob Grosser, the company's president. "Greenwich Capital has done a fabulous job for us," he said. "And we're more loyal than your average company."

The mortgage-backed securities market has plenty of room for a new entrant, according to Eric C. Green, chief financial officer with FirstPlus Financial Corp., Dallas. FirstPlus is a large originator of home equity loans that it securitizes.

Effective issuance and underwriting of asset-backed securities requires investment firms to depend substantially on the abilities of the company originating the loans, Mr. Greene added.

He cites a recent Lehman Brothers transaction as a cautionary tale for new entrants. The deal, which didn't close on time, involved securitization of Title I home improvement loans with Keystone Bank. "Lehman had an issue with the servicer of the loans," Mr. Greene said, and had to perform unusually extensive due diligence.

Alex. Brown also will need to ensure that its research department is up to par, Mr. Greene added. "They have the talent to sell the bonds, and they know the investors, so it'll be comforting to know that the deal is going to perform well."

Alex. Brown says it is committed to the underwriting scene. "We're not expecting this to be a six-month project or a 12-month project," Mr. Jamison added. "We're in it for the long term."

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