of loans to low-income borrowers. Bear, Stearns & Co., in a joint venture with Financial Modeling Concepts Inc., last week brought $336 million of securities to market backed by Community Reinvestment Act loans from Mellon Bank. Last November Bear Stearns did the first CRA deal with First Union Capital Market Corp., for $411 million. CRA portfolios consist of loans geared to people with low incomes or who live in low-income areas, said Ned Brown, president and managing partner of Financial Modeling, a Jersey City specialist in data and technology for affordable-lending programs. "This is a totally new area of securitization," Mr. Brown said. Investor interest appears to be growing because prepayment speeds for CRA loans are lower than for traditional conforming loans. When homeowners prepay, investors can lose interest income and principal. In the Mellon deal, more than 90% of the securities were bought by insurance companies and money managers, Mr. Brown said. "This deal was five times oversubscribed in the first three hours," said Mr. Brown. "We could have sold over a billion of the Mellon certificates easily." He said the First Union deal was three times oversubscribed.

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