As long as sound underwriting standards are applied, lenders should not be afraid to add a little spice to the menu of mortgage offerings, mortgage securities investors say.

For instance, Paul Geyer, a portfolio manager with Chubb Corp. is intrigued by the prospect of securities backed by "transportable" loans in which borrowers can transfer their mortgages to a new property when they move.

These securities, Mr. Geyer said, would potentially be less volatile than many other mortgage securities because they would not prepay quickly.

Mr. Geyer raised the suggestion during the Secondary Marketing Conference of the Mortgage Bankers Association. The session offered a rare chance for mortgage securities investors to speak their minds directly to mortgage bankers.

And, for the most part, lenders liked what they heard. "We want to take this information back to originate products that provide more value for us," said Carroll Justice, senior vice president of FT Mortgage Companies, lender in Dallas.

Indeed, lenders stand a better chance of making more money from loans when they know investors are willing to purchase them.

The investors at the session-ranging from pension fund chiefs to investment banking managers-said variety was a key word because standard mortgage-security returns are less attractive than they were in the past.

This is because yields have been driven down through large scale securities purchases by Fannie Mae and Freddie Mac, and hedge funds that can capitalize on smaller spreads, said A.L. Goduti, vice president with Scudder, Stevens & Clark Inc.

More varied securities can offer better returns, Mr. Goduti said. He and other investors said they were willing to accept securities backed by innovative lending strategies like 125% loan-to-value ratios-because of lenders' track record for prudent underwriting. But, the investors said they would likely demand additional return for being the pioneer purchasers of these newer securities.

"I'd say to the mortgage industry, 'Be creative,' " said Richard Piket, portfolio manager for the San Francisco Public Employees pension fund. "Present structures to us through which we can take advantage of return opportunities."

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