GreenPoint Financial Corp. and GE Capital Corp. are among a handful of potential buyers sizing up subprime lender United Companies Financial Corp., sources close to the companies said.

United Companies announced July 21 that it would have disappointing second-quarter earnings and was looking for a "strategic partner."

Since then, about 10 companies have done due diligence on Baton Rouge, La.-based United, sources said, and about half are still interested, including GreenPoint and GE Capital.

Some observers said they expect a sale within three weeks, but others were skeptical that the company would be sold.

The market is unlikely to dictate the sort of rich premium that specialty finance companies commanded earlier this year when lenders like Money Store and Beneficial Corp. were bought, analysts said.

A recent downturn in financial stocks in general, and specialty finance in particular, may mean that companies for sale like United-including Aames Financial Corp., Los Angeles, and Southern Pacific Funding Corp., Lake Oswego, Ore.-will command lower multiples than they are willing to accept.

United Companies has been trading at around $16 a share this week and was expected to sell for $20 to $30 a share.

United is the most attractive of the three companies up for sale, said Stephen G. Moyer, an analyst at NationsBanc Montgomery Securities. The company has a strong retail presence, an established servicing platform, and a good mix of loan products, he said.

But United continues to be plagued by high delinquencies in some of its portfolios, Mr. Moyer noted. The company also has a $900 million residual pool of high-risk loans that it has had to retain on its books-an asset that could change value depending on how the loans perform.

Several lenders in the sector, including United Companies, have been forced to restate earnings when loans didn't perform as expected. "No one thinks the residual is really worth $900 million," Mr. Moyer said. Instead, a buyer will be interested in United because of its originations platform, he said.

The company makes loans through 237 offices in 42 states, a network of brokers and correspondents, a manufactured housing division, and a unit that makes partnerships with banks.

In the second quarter, United originated $802.5 million of loans.

GreenPoint, a New York thrift, has long maintained that it is interested in the specialty finance market. In April, it bought the second-largest manufactured housing lender in the country from BankAmerica Corp., San Francisco, for $700 million.

GreenPoint spokesman Rich Humphrey said he could not comment on market rumors but said the thrift's interest in the nonconforming mortgage market wasn't satisfied by the BankAmerica deal. "We're a specialty home finance company," he said. "We're continuing to look for opportunities in the market."

Stamford, Conn.-based GE Capital did not return calls seeking comment.

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