By Nancy Leinfuss

NEW YORK, Nov 15 (Reuters) - GSC Group is marketing a new fund that will invest in distressed subprime residential mortgage-backed securities, a spokesman for the investment firm said on Thursday.

"We are getting ready to launch the distressed fund which will be run by our real estate group," said spokesman Carl Crocetto.

According to industry sources, the new "Pendulum Fund" will invest in distressed classes of cash and synthetic asset-backed securities. GSC is currently raising money for the new fund, they said.

Ed Steffelin, who runs the firm's hedge fund Eliot Bridge, will manage the new fund, industry sources said.

GSC Group, an investment advisor with $24 billion of assets under management, is the latest to join the hunt for undervalued securities hurt by forced liquidations of subprime assets.

Goldman Sachs Group Inc (GS.N: Quote, Profile, Research) has raised $4.5 billion for funds that will take advantage of distressed prices, Chief Executive Officer Lloyd Blankfein said on Tuesday. BlackRock Inc (BLK.N: Quote, Profile, Research) CEO Laurence Fink on Tuesday said the money management firm is launching distressed securities funds.

Losses to banks and investors from the subprime mortgage crisis could rise to $480 billion in coming years, analysts at UBS AG (UBSN.VX: Quote, Profile, Research) said in a recent research note.

Large banks that led the business of underwriting subprime debt and repackaging the bonds into CDOs have already suffered more than $40 billion in write-downs. Two equity analysts on Monday said banks may lose as much as $400 billion as defaults on risky home loans soar to more than 25 percent. For story, see [ID:nN12453557]. (Reporting by Nancy Leinfuss; Editing by Diane Craft)