The secondary market for Community Reinvestment Act loans continues to heat up.

Lehman Brothers and Countrywide Home Loans were co-managers in a $200 million deal that closed this week. And market sources said Bear, Stearns& Co. has priced senior tranches in a $396 million securitization.

Both deals signal the entry of new players in a secondary market that promises to help lenders meet their obligation to provide credit to underserved segments of their communities.

The Bear Stearns deal is expected to settle at the end of August, said Richard A. Ruffer Jr. associate director at the firm. It consists of $364 million of CRA loans acquired from Citibank and $32 million from two banks of Citizens Financial Group Inc.-sources said.

Citizens units Citizens Bank of Massachusetts and Citizens Bank of Rhode Island originated the loans. Fannie Mae will guarantee the senior tranches of the deal, sources said.

Lehman, in its first CRA deal, securitized a package of loans made by KeyCorp and serviced by Countrywide. Fannie Mae guaranteed the senior tranches of this deal.

Bear Stearns orchestrated the first three large CRA securitization deals. One was a $749 million package of loans from Fleet Financial Group, which Fannie Mae sold in real estate mortgage investment conduits. The other two were Freddie Mac transactions with First Union Corp. for $411 million in November 1997 and Mellon Bank Corp. for $336 million in April of this year. Both were then sold as real estate mortgage investment conduits. Investors in Remics include pension funds, insurance companies, and banks.

Other Wall Street firms including Salomon Smith Barney and Nomura Securities are exploring the evolving CRA securitization market, sources said.

And Fannie and Freddie are both looking to increase their market share. The one that first develops a "flow product," which allows the sale of a loan as soon as it is originated, could gain a competitive advantage, said Ned Brown, president of Financial Modeling Concepts, a Jersey City company that specializes in analyzing CRA loans.

Hoping to be able to buy loans on a flow basis, Freddie Mac wants to talk to lenders about creating more uniformity in lending practices, said Michael F. Coffey, vice president of expanding markets at Freddie Mac.

Barry Zigas, executive director of the national housing impact division of Fannie Mae, said it wants a marketplace in which global banks and other lenders have confidence that their loans can be securitized, and thus can manage their risks more efficiently.

For conduits and Wall Street firms, more securitization also means more profit opportunities. The securities are attractive to investors seeking prepayment protection-a characteristic widely believed to be associated with securities backed by loans to low- and moderate-income homeowners.

Lehman Bros. says it hopes that lenders, big and small, will increase their securitization of CRA loans. The market for the loans appears to be gaining strength: Lehman's $200 million securitization was oversubscribed, said David N. Sherr, managing director. And Mr. Sherr said Lehman has a pipeline of securitizations to take the firm through the remainder of the year.

"What we hope to do is to show them that these loans can be originated profitably or at a level which is not at a loss," Mr. Sherr said. "We can find efficient ways to securitize these loans so they are not at a loss or not subsidized."

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