Moving into an area that most Wall Street dealers deserted after the 1998 liquidity crisis, the investment bank Donaldson, Lufkin & Jenrette Inc. is starting a subsidiary that it hopes will become a major buyer and securitizer of nonconforming mortgages.

The unit, which has yet to be named, will be based in Princeton, N.J., though most of its 100 employees will work out of Austin, Tex. It will be led by Jeffrey Detwiler, who was recruited from GMAC-Residential Funding Corp. in March. Donaldson did not say when the subsidiary will officially start doing business.

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