WASHINGTON - Fannie Mae has expanded its Fannie Megas product line to include adjustable-rate mortgages. The Megas allow investors to take smaller pools of Fannie Mae mortgage-backed securities and form one large pool.

The company says Megas can offer investors reduced administrative costs, lower financing rates, and greater geographic diversity in the larger pool. Fannie Mae has more than $15 billion of ARM Megas outstanding.

The change is intended to increase the liquidity of the ARM market and make it easier to trade adjustable-rate mortgage securities. With the surge in demand for ARMs as interest rates began to rise last year, Fannie Mae has increasingly been urged to facilitate secondary-market trading in ARMs. Earlier this year, Fannie reduced the number of ARM sub-types to improve liquidity, and made it easier for investors to construct ARM Megas.

Fannie Mae also recently began securitizing ARM loans guaranteed or endorsed by the Veterans Administration or the Federal Housing Administration, bringing additional liquidity to that segment of the ARM market.

The first ARM Mega transaction, totaling $1 billion, was completed with Abbey National, the United Kingdom's second-largest mortgage lender.

Megas provide same-day turnaround for wired collateral on settlement day.


Dime Savings Bank of New York is closing its correspondent mortgage office in Jacksonville, Fla. The thrift announced it would be moving the business to its Uniondale, N.Y., office, possibly with some of the staff from Jacksonville.

Dime, which recently merged with Anchor Bancorp to become the nation's fourth-largest publicly held thrift, said the move was in line with its strategy to consolidate back-office operations. It said it planned to dedicate additional resources to its correspondent mortgage operation.

Jenne K. Britell, general manager of mortgage banking, said the consolidation would result in increased operating efficiency and improved service.

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