The mortgage-related businesses that Bank of America Corp. would get from buying Merrill Lynch might look redundant after its July purchase of Countrywide Financial Corp., but some observers say one or both of Merrill's subprime servicing units might help BoA work through its problem Countrywide loans.

BoA's deal, announced Monday, to buy Merrill for $50 billion of stock could also prompt a phasing out of the brokerage company's relationship with PHH Corp., analysts said. Merrill Lynch Credit Corp., a unit in Jacksonville, Fla., that makes prime jumbo mortgages for the brokerage's clients, has outsourced much of the work to PHH for at least 10 years.

But Countrywide's capabilities would make such outsourcing unnecessary after Merrill's contract with PHH expires in 2010, observers said. BoA quit most subprime mortgage lending in 2001. Industry sources said Monday that Merrill's two servicing units — Wilshire Credit Corp. in Beaverton, Ore., and Home Loan Services  in Pittsburgh — have room to take on additional loans.

"I would think that, if BofA wanted to, it would be an effective way of getting additional capacity for the old Countrywide loans," said Phillip Comeau, a principal in the consulting firm Phillip Comeau Co. and a former executive at Freddie Mac. David McDonnell, a founder of Statebridge Co., a special servicing start-up in Denver, said BoA "should probably keep Wilshire Credit intact" because it is "a needed platform in today's market."

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