The mortgage securities industry, seeking to defend its respectability, is preparing to send its salespeople back to school.

Starting this summer, thousands of brokers will receive refresher courses in sales techniques and product characteristics.

Severe losses by some investors have given mortgage securities a reputation for volatility and generated embarrassing lawsuits. The training courses are seen as a way of maintaining the industry's good standing and allowing the business of selling mortgage securities to remain robust.

"It's important to ensure professionalism," said George P. Miller, associate general counsel with the Public Securities Association, New York.

The training will allow brokers and salespeople to comply with continuing education requirements that the association and various securities regulators - including the National Association of Securities Dealers - adopted last year.

The securities association's mortgage education committee came up with the program with help from Dearborn Financial Publishing, and Financial Training Services, whose staff is drawn from the trading desks at CS First Boston and Morgan Stanley & Co., among others.

The ongoing training could help temper negative publicity over a raft of lawsuits that were spawned by disgruntled investors as the bond market dropped dramatically in 1994. Mortgage-backed securities that were packaged as derivatives led to huge losses for municipal and institutional investors.

The program's content will range from an overview of the mortgage-backed securities market to questions about suitability for various types of investors. The training will be updated and offered on an annual basis.

"This kind of practical training is important," Mr. Miller said. "It will allow brokers and salespeople to impart useful knowledge to those they deal with."


Mortgage securities that Wall Street sold in 1995 are carrying higher delinquency rates than those that were initially traded in 1993 and 1994, a study finds.

The underlying collateral for 1995 securities was twice as likely to be in default than 1994 loans and six times more likely than 1993 loans, according to Mortgage Information Corp.

The San Francisco research firm drew its conclusions by analyzing 259 mortgage securities deals made on Wall Street in the past three years. The firm looked at transactions that were handled by private conduits like GE Capital, Countrywide Funding, and Independent National.

Analysts with Mortgage Information said smaller down payments and the easing of credit standards primarily caused the higher delinquency rates for the newer securities, which are collateralized by fixed-rate mortgages.

The development is particularly troubling, given relatively low interest rates, increasing consumer credit debt, and the economy's moderate growth, the analysts said.


PEOPLE ON THE MOVE: Smith Barney & Co., New York, has hired Michael Schumacher as a director and head of its mortgage-backed securities group. Mr. Schumacher joined the investment bank from J.P. Morgan, where he was a senior mortgage-backed securities trader.

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