Though portfolio managers at Saddle Brook, N.J.-based investment company Lexington Management had been out of the mortgage game since the summer of 1998, this past June seemed to present a golden opportunity for the company to put its money back to work.

"Starting in mid-June, we've been steadily buying, mostly project loans in the Ginnie Mae market," said Denis Jamison, senior vice president at Lexington. "There are some of the best spreads now that we've seen in a couple of years, despite the fact that everyone's durations are a little bit longer. I'm sure some people lost a lot of money this past quarter, but we're at a point where valuations, I think, are pretty good."

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