WASHINGTON -- In one of the largest deals of its kind, Fannie Mae plans to package as securities some $1.3 billion of affordable-housing loans held by American Savings Bank, Irvine, Calif.

The deal, to be announced today, comes as the mortgage industry is under intense pressure to boost its financing of homes for low-income and moderate-income people.

The transaction will help Fannie Mae -- the Federal National Mortgage Association -- meet tough affordable lending goals set by the Department of Housing and Urban Development.

Fifty-seven percent of the loans are to borrowers in central cities in California, and 36% are to borrowers with family incomes below the local medians.

American, the nation's sixth-largest thrift, will hold the securities initially, but may sell them later. The thrift has assets of about $17 billion.

Sharing the Risk

The deal gives American "confidence that this kind of mortgage is sellable in the secondary market," said Nick Sikeotis, vice president and whole loan trader at American.

"It's going to make us more comfortable because we now share the credit risk with Fannie," he said.

Previously, the largest affordable-housing deal announced by a lender and a secondary-market agency was a$1.25 billion agreement between Fannie Mae and Countrywide Credit Industries.

But Fannie Mae officials declined to rank the latest deal, leaving open the possibility that larger pacts have been struck without publicity.

The Countrywide deal, like many others, covered loans to be originated in the future. The American agreement, by contrast, involves loans already in the thrift's portfolio.

Fannie Mae officials said the deal came about after they read a newspaper report quoting American Savings president, Robert Barnum, making critical remarks about the agency's affordable-housing policies.

In the report, Mr. Barnum said American Savings would like to do more in that area but was inhibited by the secondary market's buying standards.

"It upset us initially," said John Fluford, senior vice president of Fannie Mae's western region. "We said, |What are these loans you thing we can't do?'"

American Savings Sent Fannie Mae a file containing loans worth $3 billion, and Fannie chose to securitize approximately $1.3 billion of them.

No |Cherry-Picking'

The loans -- all adjustable-rate models -- are a fair representation of American's central-city lending, Mr. Sikeotis said.

"They didn't try to cherrypick" the portfolio, he said.

Though terms aren't being disclosed, securitizations generally require lenders to pay annual fees of 0.15% to 0.40% of the loan amount.

The lender and the agency may negotiate to share the credit risk, or the agency may take on all of it.

Mr. Sikeotis said the deal's structure was designated "non-recourse" by the Office of Thrift Supervision.Bigger and BiggerMegadeals between FannieMae and lenders for lower-incomemortgagesLender/date SizeGlendale $1 billion ofFederal Bank loans to beDec. 1991 originated over three yearsCountrywide $1.25 billion ofCredit loans to beIndustries producedMay 1992 over 18 monthsAmerican $1.3 billion ofSavings mortgages fromBank thrift's currentSept. 1993 portfolioSource: American Banker

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