servicing rights to First Nationwide Mortgage Corp., a unit of California Federal Bank, during the next 12 months.

The deal supplements a similar pact that the home loan unit of Bank One Corp. made with HomeSide Lending of Jacksonville, Fla., in April 1998 and renewed last March. The Chicago banking company wanted to diversify its strategic partnerships, said Brian Modiano, chief financial officer of Banc One Mortgage of Indianapolis.

Any time you have more than one partner, you get a better flavor for the market,'' Mr. Modiano said. He said that since the March renewal of the arrangement with HomeSide, interest rates have risen, increasing the value of servicing.

Phoenix Capital Inc. of Denver brokered the Cal Fed deal. Its terms were not disclosed, but with conventional servicing quoted at 1.125% to 1.625% of face value, the servicing rights would be worth $34 million to $38 million.

For First Nationwide, the deal is a way to diversify its servicing portfolio geographically, said Walter C. Terry Klein Jr., its president and chief executive. About 80% of First Nationwide's wholesale and retail originations come from California; Bank One is big in the Midwest.

The deal would also give First Nationwide a stable source of growth for its portfolio, Mr. Klein said, so it does not have to bid on every bulk servicing package that hits the market.

First Nationwide and Bank One are discussing other possible synergies. We're looking for ways to make it far more than just a servicing transfer,'' Mr. Klein said.

One example: As in its deal with HomeSide, Bank One will retain the right to cross-sell financial products to the mortgage customers it sends to First Nationwide, Mr. Modiano said.

Banc One expects to originate $9 billion to $10 billion of loans this year, down from $13 billion last year, Mr. Modiano said. HomeSide will get most of the servicing.

The original deal with HomeSide last year also included the sale of Banc One's $18 billion servicing portfolio and signaled the company's exit from that end of the business. As part of the March deal, the company sold the $18 billion portfolio of First Chicago NBD, with which its parent had merged last fall.

Banc One originally had a flow'' arrangement with HomeSide, in which it would sell each individual loan to HomeSide. But in March the parties switched to a minibulk'' arrangement in which the Midwest company sells a loan in the secondary market, services it for a few months, then sells servicing rights in large bundles to HomeSide.

The Bank One unit will use the minibulk structure with First Nationwide. It is preferable because servicing can be transferred more efficiently in larger chunks, Mr. Klein said.

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