Carbadon Corp. has pulled Empire of America Realty Credit Corp. from the auction block.

The Buffalo-based mortgage bank was put up for bids early in the summer but failed to attract a price its owners felt was fair, according to David L. Brown, president of Empire of America.

"We just couldn't come to a meeting of the minds. We decided to wait until refinancing activity calms down and then get a little better price," he said.

Record rates of servicing runoff have eroded the market value of some servicing portfolios.

Runoff Above 30%

This year, Empire of America has suffered a runoff rate of "just above 30%," according to Mr. Brown. The company services $6 billion in mortgages, down from $6.6 billion in June 1992.

The bidding came down to a short list of three parties: Wesav Mortgage Corp., Scottsdale, Ariz.; Household Commercial Financial Services of Prospect Heights, Ill., a subsidiary of Household International Inc.; and an unidentified Florida-based investor group.

After Wesav and the investor group dropped out, Household and the owners of Empire of America came to loggerheads on price.

The Buffalo Factor

Besides disagreeing on the value of the servicing asset, potential investors were put off by the fact that Empire is in Buffalo, some observers said.

Also, bidders seemed to have a lower opinion of the company's originations outfit than does Carbadon. Empire has done an impressive job of building up its origination capability since it emerged from Resolution Trust Corp. conservatorship in 1991. Last year, the company originated $4 billion.

Help for GE

When Empire of America was first brought to market, Carbadon was believed to be seeking about $ 100 million. Carbadon, a joint venture of Cargill Inc., Gordon Investments, and a venture capital pool affiliated with Prudential Securities, bought Empire of America from the RTC for $40 million.

Separately, Salomon Bros. has been retained by GE Capital Mortgage Services in its efforts to sell the retail originations unit of Shearson Lehman Hutton Mortgage Corp., according to market sources.

General Electric is representing itself in attempts to sell Shearson's wholesale unit, said Alan Hainey, president of GE Capital Mortgage Services. GE is seeking to sell because it "wants to concentrate on buying closed jumbo loans."

The wholesale unit originated about $1 billion in the first three quarters, Mr. Hainey said. GE purchased Shearson and its $17.5 billion of servicing for $70 million in August.

GE has long been a leading provider of mortgage insurance. Many think its move to divest itself of the Shearson units is partly meant to assuage fears it will become a powerful competitor in originations.

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