As the total of privately owned mortgage companies dwindles, some investment bankers are saying that Headlands Mortgage may be on the auction block.

Although the chief executive of the Larkspur, Calif., wholesale lender denies it, some investment bankers say that the company has been shopped around, a deal would make sense, and an operation like Headlands could fetch $45 million or more.

Headlands, a wholesaler with offices in California and five other western states, originated more than $2 billion of mortgage loans last year.

Its chief executive officer, Peter T. Paul, said that public equity or high-yield-debt offerings are more likely than a sale in the near future. "We might sell at some time, but I still like showing up for work," Mr. Paul said.

But others said today's lower interest rates make production franchises like Headlands attractive as more homeowners look to refinance. Because of this, there has been interest recently in mortgage originators, although much of the focus has been on mortgage banks with a significant retail operation.

Last month, Dime Bancorp announced that it was buying North American Mortgage Co., which is predominantly a retail producer of home loans, in a stock deal currently worth about $350 million.

In the last eight months, Fleet Financial Group sold five retail offices to PNC Bank Corp.; Bank United Corp. sold 61 offices-most of them retail - to National City Corp.; and Signet Banking Corp. sold 24 retail offices to Accubanc Mortgage Corp.

"Wholesale operations don't get big multiples but they do sell," said Hilary Renz, senior vice president of Cohane Rafferty Securities, a Harrison, N.Y.-based mortgage investment banking firm. Mr. Renz said he has heard Headlands is for sale.

Harbourton Mortgage sold its wholesale production operation this year to CrossLand Mortgage for $4 million up-front, but the deal has a provision that could make the final purchase price $7.25 million. The extra $3.25 million would be paid if Harbourton's volume is maintained by CrossLand. Harbourton originated $3.2 billion last year.

Based on this formula, Headlands' production would only be worth about $4.6 million. But one investment banker said that Headlands' production would go for a higher price because rates are much lower now than they were in February. This banker added that a prospective buyer would also pay more because Headlands securitizes loans.

The investment banker said that Headlands' servicing portfolio, which totaled $3.3 billion at March 31, could fetch about $40 million in a sale. Mortgage companies typically pay higher premiums for servicing than production.

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