After months of denials, Weyerhaeuser Co. has announced that its mortgage subsidiary may be on the block.

Weyerhaeuser, the nation's third-largest forest products company, said Monday that it had hired the New York investment banking firm Goldman, Sachs & Co. to explore options regarding the future of Weyerhaeuser Mortgage.

"We believe that this is a strong business whose customers and employees may better benefit from ownership that is more strongly focused on financial products," said John W. Creighton Jr., president and chief executive officer of the parent company.

The mortgage unit, based in Woodland Hills, Calif., made its first acquisition ever a few months ago and is restructuring its wholesale operations. But the possible sale does not come as a surprise in light of the months of rumors. The mortgage business produces a minute portion of Weyerhaeuser's overall revenues and is not making a big contribution to profits.

"I'm assuming (Weyerhaeuser) determined that, with economics in the mortgage business being as cyclical as they are, they can make more money investing their capital in other ventures," said Hilary Renz, senior vice president of Cohane Rafferty Securities.

Last year, earnings from Weyerhaeuser's real estate and financial division, of which Weyerhaeuser Mortgage is a part, amounted to $14 million of the parent's total profits of $983.4 million.

During the first eight months of this year, Weyerhaeuser Mortgage originated $2.1 billion of first mortgages and had a servicing portfolio of $4 billion after selling about $5 billion of servicing rights. In 1995, Weyerhaeuser originated $2.2 billion of loans and serviced $10.4 billion. Recent transactions suggest the servicing portfolio might fetch $60 million to $75 million.

One aspect of Weyerhaeuser's mortgage operations that might be attractive to prospective buyers is the relationship the unit has with home builders. This was enhanced in April by the acquisition of Southwest Colonial, a San Diego lender that has six limited partnerships with home builders.

Mr. Renz said that if Weyerhaeuser decides to sell the mortgage subsidiary the most likely buyer would be one of the larger mortgage bankers. Still, he added, it is too soon to indicate any company in particular that may be interested.

Norwest, the largest mortgage banker in the country, and NationsBank, which recently announced a deal to buy Boatmen's Bancshares, have been acquirers in recent months.

But the fact that Weyerhaeuser Mortgage is headquartered in California could scare off some buyers. Mr. Renz said the costs of servicing in California are higher than nearly anywhere else in the country. For this reason, he said, he thinks any eventual buyer would want to phase out the servicing platform.

Weyerhaeuser Mortgage has 58 offices in 15 states and about 1,500 employees.

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