The wave of bank mergers is creating a class of investors in mortgages that will have more clout with Fannie Mae and Freddie Mac, some observers say.

The announced merger between NationsBank Corp. and Bank of America would create a new leader in mortgage investments, with a portfolio of $97.4 billion.

The current leader is Chase Manhattan Corp., which has close to $62.7 billion in investments in mortgage-backed securities, collateralized mortgage obligations, and home equity loans.

The combination of Wells Fargo & Co. and Norwest Corp., announced last week, would create a combined investment portfolio of almost $44 billion.

The financial canal may be harder to navigate with big tankers bearing down on one another, instead of a mix of large and small vessels.

"One of the significant things of these megamergers is that it will create other players of a size that will cause Fannie and Freddie to listen more thoughtfully to reasonable requests," said Weston E. Edwards, president of Weston Edwards & Associates, Laguna Beach, Calif.

Fannie and Freddie are "so large compared to their customer base that they tend to rather dictate the terms of business," he said.

David M. Steele, fixed income portfolio manager with First American Asset Management in Minneapolis, a wholly owned subsidiary of U.S. Bancorp, said the size of investment portfolios could significantly affect the secondary market.

The landscape will be one with "fewer trades, larger pieces," Mr. Steele said.

Fannie Mae is the largest investor in mortgages, with a portfolio of single-family mortgages totaling more than $343.9 billion at the end of May. Freddie's retained portfolio totaled $186 billion at the end of March.

Some shrugged off the concentration issue.

"In my book, they're not going to take anything away from me," said Martin J. Schafer, vice president for Invista Capital Management in Des Moines, a wholly owned investment subsidiary of Principal Mutual Life Corp.

"Other than consolidation of power, you're not going to get any net new demand and or net less demand," Mr. Schafer said.

There are only so many mortgages out there, and "combination doesn't increase demand, it just changes who is in power," he said.

With the mergers, Wall Street dealers may lose a client, and one of the partners may get rid of its sales staff, Mr. Schafer said. Mergers often result in getting rid of half of operations, he added.

"This is the commoditization process, which is inevitable," he said.

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