"Churning" is a dirty word in the world of financial services.

The practice - executing unnecessary transactions in a customer's account - lies at the heart of a controversy over a new effort by lenders to pass risk off to investors by securitizing home loans with servicing rights attached.

Such securitization is a good idea for lenders because they avoid earnings volatility that arises from fluctuations in the value of servicing portfolios, usually in response to changes in interest rates.

For investors, too, it's a good idea, at least on the surface, because investment is about assuming risks in return for profit opportunities, and securitized servicing rights give them one more investment choice.

The problem is that the Public Securities Association, some investors, and even some lenders think the mortgage industry will play a nasty game of churning: first selling the loans and servicing rights, then aggressively resoliciting the same borrowers to refinance their loans, then selling the refinanced loans right back to investors.

The result: more money for the lender but a faster draining of loans from the investors' portfolios.

The key question: Would lenders - whether they are banks, thrifts, mortgage companies, or brokers - churn to any greater extent than they do now if the servicing rights are securitized?

The fact is, lenders have never been shy about soliciting their borrowers for refinancings. Their rationale: economic forces will drive the refinancing efforts in any case.

"Somebody is going to be working those customers anyway on refis," said Warren Lasko, executive vice president of the Mortgage Bankers Association of America. "Certainly the brokers are going to be active. I think the impact on prepayments (from securitizing servicing) would be minor at most and shouldn't be a relevant concern in pricing a security."

One could even argue that there may be less incentive to solicit refinancings from existing customers. Lenders typically do telemarketing defensively to protect themselves from a drain on their own servicing portfolios. But with the new securitizations, the loans are no longer in their portfolios and there is no need to defend or replace them.

Mr. Lasko, meanwhile, is sour about the bond association's caution. "It's been my experience over a very long time, more than 20 years, that Wall Street people seem to be hypersensitive to anything that changes the status quo in terms of prepayments," he said. He added that this touchiness merely impedes liquidity in housing finance.

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The thrift industry is redefining itself, and many of the savings institutions will look a lot less like mortgage factories in coming years.

And the securities industry is also redefining thrifts. A growing view is that they are simply pools of assets ripe for purchase at generous prices. Those assets include the potential windfall of a settlement with the government over the value of goodwill that is currently being litigated.

In a report last week, Thomas J. Monaco, a thrift analyst with Salomon Brothers Inc., New York, valued several thrifts at substantial premiums to their present market value when takeover and goodwill value are computed.

H.F. Ahmanson, for example, could be worth $46 a share, against a recent price of about $26; Glendale Federal, $38 a share, against $18.125; and Golden West, $72 against $55.375.

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