Mellon Bank Corp.'s mortgage division, which was put on the block last week, is expected to fetch more than $1 billion as the giant loan servicers - and maybe some midsize players - skirmish for market position.

Mellon Mortgage, based in Houston, originated $6.2 billion of loans in the first eight months of 1998 and has a $73.5 billion servicing portfolio. The unit's rank among mortgage servicers and originators slipped in recent years as other big banks made acquisitions.

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