BankAmerica Is Said to Consider Buying Shearson Mortgage Unit

BankAmerica Corp. is considering buying the large mortgage banking unit of Shearson Lehman Brothers Inc., according to sources in the mortgage industry.

Such a purchase would make the San Francisco-based banking company one of the nation's largest mortgage servicers. BankAmerica is already one of the biggest companies in home loan originations and holdings.

$18 Billion Portfolio

The unit on the block -- Shearson Lehman Mortgage Corp., Irvine, Calif. -- services more than $18 billion of loans, funneling monthly payments from homeowners to holders of mortgage-backed securities.

At yearend, Shearson Mortgage ranked No. 9 among mortgage servicers. With a servicing portfolio of $9.5 billion, BankAmerica did not make the top 25.

The Shearson unit could fetch a hefty price. The servicing portfolio alone is worth about $300 million, based on similar deals. And the other parts of the company could boost the price. But the actual value of the company is unclear because it is believed to carry some debt, which would reduce the price tag.

Shearson is mulling a sale as part of a plan to shore up capital at the Wall Street firm, which is owned by American Express Co.

In addition to BankAmerica, several nonbank players are said to be examining the unit. Among these, the sources said, are the mortgage units of General Electric Capital Corp. and Sears, Roebuck and Co.

All the deliberations are said to be very preliminary, however, and sources said Shearson may pull the unit off the market if it deems the offers too low. Two years ago, the Wall Street firm was reportedly on the brink of selling the unit to Michigan National Corp., then changed its mind.

A spokesman for BankAmerica said the company has a policy of not commenting on "speculation about potential acquisitions." Officials at Shearson, GE Capital, and Sears also declined to comment.

The sources, who insisted on anonymity, said BankAmerica is seriously studying a purchase and is already very familiar with the Shearson unit. Some of BankAmerica's top mortgage executives came from the unit, and BankAmerica is said to have regular business dealings with Shearson Mortgage.

In recent years, BankAmerica and some other large banking companies have notched huge gains in mortgage originations, taking advantage of a pullback by crippled thrifts.

One California lender speculated that BankAmerica may find other parts of the Shearson unit even more appealing than the servicing portfolio. For example, the unit is a big originator of home equity loans.

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