National Cooperative Bank has issued a new kind of mortgage security in an effort to attract capital to the low-income housing market.

The issue, backed by multifamily mortgages, is the first involving low-income projects to be sponsored privately in a market dominated by the government-sponsored housing agencies, said Grace Huebscher, president of the bank's National Cooperative Bank Mortgage Corp.

The securities are being called mortgage investments in low-income communities, or MILC.

The Federal National Mortgage Association and the Federal Home Loan Mortgage Corp. package billions of dollars of securities each year for sale to investors. The securities, backed by the government, are virtually risk-free.

National Cooperative hopes its security will be the start of an additional multibillion-dollar market for affordable-housing loans, said Ms. Huebscher.

William H. Apfel, vice president of United States Trust Co. in Boston, one of the primary investors in the security, said the new bond would introduce "the advantages of the huge and sophisticated institutional investor market for mortgage-backed securities to the generally neglected area of private-market affordable housing financing."

While National Cooperative's $26 million security is not guaranteed, 68% of it -- the top tranche -- is triple-A rated. The other 32%, in five lower-rated tranches, will be the first to absorb portfolio losses.

Investors in the security were Cigna Insurance; UST Co., the investment manager for Calvert Social Investment Fund, and the issuing bank. Standard & Poor's rated the security and National Cooperative was the issuer and responsible for placement.

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