HomeSide Inc., one of the nation's largest mortgage lenders, is boosting its broker business through a deal with Barnett Banks Inc.

Barnett, which owns about 27% of HomeSide's stock, has agreed to transfer most of the operations of Loan America-Barnett's wholesale lending unit-to HomeSide.

Industry observers had speculated since May that a deal between HomeSide and Barnett was in the works. Barnett bought Loan America in 1994 but has been scaling back other mortgage operations. The Jacksonville, Fla., banking company sold its $33 billion servicing portfolio to HomeSide last year in exchange for the ownership stake.

The latest deal is consistent with HomeSide's strategy of building a low-cost origination network. The company has a relatively small retail operation. It purchases most of its loans from a nationwide network of brokers and correspondents.

"The broker business is a growth business for us. It is something we have been focused on for a while," said Joe K. Pickett, HomeSide's chief executive officer.

Under the transaction, which is expected to close in the fourth quarter, HomeSide would receive control of 13 Loan America offices in 11 states. About 75 Loan America employees would join HomeSide. Mr. Pickett said that with the addition of these offices and employees, HomeSide is likely to originate about $3 billion in loans from brokers annually.

Some lenders are less willing to originate through wholesale channels because it is highly price competitive. Several wholesale lenders have also been a target of class-actions regarding premiums paid to brokers.

But Gerard Cassidy, an analyst with Tucker Anthony, said HomeSide's continued emphasis on wholesale lending would bolster the company's earnings because of the lower costs involved.

The deal would enable Barnett to focus more on its core markets of Florida and Georgia. As part of the agreement, Barnett would have exclusive rights to refinance mortgages and sell other bank products to HomeSide customers in these two states.

Douglas Freeman, Barnett's chief consumer credit executive, said the bank would still have a small presence in wholesale lending. It currently purchases loans through brokers in Florida and Georgia and would continue to do so under the Loan America name.

Barnett would also continue to operate retail mortgage branches nationwide, but the servicing rights would be sold to HomeSide after the loans were originated.

"Barnett has done a good job of figuring out what it's good at and what it's not good at," said George Bicher, an analyst with Alex. Brown & Sons Inc.

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