First Union Corp. is using a novel strategy to grow its mortgage securitization business.

The Charlotte, N.C., banking company offers its capabilities as a "master servicer" to bring in loans that are originated by outside lenders. As a master servicer, First Union's capital markets group collects fees from various loan servicers and distributes them to investors. But, perhaps more importantly, the arrangement allows First Union to securitize the outside loans, while letting the originators hold onto servicing rights and ongoing administration fees.

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