It lookes like Merrill Lynch is getting serious about mortgage originations.

Its consumer credit arm, which has quietly developed a presence in jumbo mortgages over the past two years, is now breaking into the mainstream market.

The most visible sign of the Wall Street giant's intentions is "Parent Power," a loan option that allows young homebuyers to avoid down payments.

Merril protects itself by requiring parents of the buyers to open securities accounts or home equity lines of credit as collateral.

Introduced in California in March, the program was rolled out in several eastern states this week.

Billion in Sales Planned

While officials of Merrill Lynch & Co. are vague about origination targets, they say they have arranged to sell $1 billion of new mortgages to the Federal National Mortgage Association over the next 12 months.

The agreement covers a range of mortgage types, including loans under Parent Power.

Merrill Lynch Credit Corp., based in Jacksonville, Fla., brings some powerful competitive weapons to mortgages.

An army of 10,000 "financial consultants" associated with Merrill's brokerage arm helps on orginations. In the secondary market, Merrill often gets help from its mortgage securities specialists.

Up to now, the Florida-based unit offered only home equity loans and jumbo first mortgages, which exceed the $202,300 maximum that can be sold to Fannie Mae and the Federal Home Loan Mortgage Corp.

Over the past two years, the unit accepted applications for about $2 billion of jumbos, said vice president Robert Cummings. That probably translated into originations of about $1.2 billion, industry experts said.

The expansion to smaller-balance mortgages "just made sense in the evolution of things," Mr. Cummings said. "Through the demands of our clients, it became obvious that we needed to offer a variety of mortgages to people who didn't need jumbos."

Meanwhile, the Jacksonville operation is also expanding into servicing. While the portfolio now stands at a modest $2 billion, observers say it is sure to increase as originations pick up.

Lyle Gramley is giving up his chief economist's title at the Mortgage Bankers Association and becoming "consulting economist" for the trade group.

It's not that the oft-quoted former Federal Reserve governor is retiring or even scaling back his duties. Rather, he says, the new moniker is a better description of what he does for the trade group.

Mr. Gramley, 65, also runs a private consulting business and sits on a number of corporate boards. When he started at the association in 1985, the outside work occupied 25% of his time, but that moved up to 50% for the past two years, he said.

The title issue came to the fore with the recent defection of Richard Peach, deputy chief economist, to the Federal Reserve Bank of New York. To recruit a replacement, Mr. Gramley and others at the trade group decided it would be helpful to adorn the position with the title of chief economist.

Mr. Peach had been "chief economist in everything but name" for the past two years, holding "full line responsibility" for the economics department, Mr. Gramley said.

Warren Lasko, the group's executive vice president, said the new title is meant to reassure the recruit that the position will be significant and long-term. "Any good candidate is going to ask, |What are Lyle's plans and where do I fit in?'" he said.

Mr. Gramley, in his work for the trade group, will continue to focus on macroeconomic forecasting. His prediction for mortgage rates: "Stable to moderately lower" for the rest of the year.

The big New Jersey mortgage bank, Margaretten Financial Corp., is assembling a network of lenders to supply it with newly originated servicing rights.

The program is aiming to produce rights on about $1 billion of loans next year, said Margaretten's chairman and chief executive, Felix Beck.

Participating lenders - regional banks, thrifts and mortgage companies - will sell the related loans to Fannie Mae, Freddie Mac, and other outlets.

The new program is part of a broad effort by Margaretten to rapidly build its servicing portfolio, which stood at $3.9 billion at the end of last year. Margaretten is also looking to purchase entire servicing portfolios.

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