The use of facilities which issue mortgage-backed commercial paper (MBCP) as a unique funding source is expected to grow this year, exemplified by last week's privately placed offering for Principal Residential Mortgage Inc. Many lenders are looking to set up their own vehicles in the near future, sources say.

Lehman Brothers was in the process of pricing $549 million of residential mortgage warehouse receivables-backed term notes in a private placement for Principal last Wednesday, simultaneously increasing availability on the company's revolving borrowing facility to $2.5 billion.

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