Barnett Banks Inc. is in discussions to sell its wholesale mortgage origination unit, Loan America, to HomeSide Inc., sources close to the companies said.

Barnett owns about 27% of HomeSide, a joint venture between the Jacksonville banking company and BankBoston Corp.

HomeSide, which originated $19.6 billion in mortgages last year, is primarily a wholesale lender, originating through networks of brokers and correspondents instead of brick-and-mortar retail branches.

Analysts estimate that Loan America, which has 15 offices in 13 states, accounted for about $1.6 billion of Barnett's $4.8 billion of originations last year. Officials at HomeSide and Barnett would not comment about Loan America.

Mark L. Constant, an analyst with Merrill Lynch & Co., said HomeSide chief executive Joe K. Pickett has made no secret of the company's acquisition plans.

"HomeSide has been continually refining which origination infrastructures fit their strategies and which don't," he said.

Mr. Constant said HomeSide wants to avoid having a significant retail presence since having branches is a more costly endeavor than employing brokers and correspondents.

Observers close to both companies said a deal for Loan America might not be too difficult to finalize given the relationship among the companies.

Last year, Barnett sold its servicing portfolio to HomeSide, which at the time was a joint venture between BancBoston Corp. and two venture capital firms, in exchange for a 33% ownership stake in the company.

After HomeSide's public stock offering this January, Barnett and BancBoston own 27% of HomeSide. The two venture capital firms, Thomas H. Lee & Co. and Madison Dearborn Partners Inc., own another 27% between them.

HomeSide's operations include BancBoston's entire mortgage unit in addition to Barnett's servicing. Most of HomeSide's senior executives, including Mr. Pickett, are BancBoston mortgage veterans.

Barnett also agreed to sell all the loans it originates to HomeSide so HomeSide can service them. If Barnett were to sell Loan America, it would continue to originate loans through retail branches and sell them to HomeSide.

Investment bankers said Barnett is likely to shed Loan America since it doesn't fit in with the Jacksonville, Fla.-based bank's strategy of strengthening its regional franchise.

But one investment banker wondered why HomeSide would want to purchase Loan America given the fact that it already is servicing the mortgages the unit originates.

"Why buy the cow if the milk is free?" the investment banker said.

Barnett bought Loan America for $62 million in 1994. Investment bankers said it was unclear how much Barnett would ask for it since the value of the company will be based solely on Barnett's origination capacity. u

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