United Companies Financial Corp.'s deal to sell most of its mortgage servicing assets to EMC Mortgage Corp. was a further signal of the dramatic deflation of the specialty finance business in 1999.

EMC, a unit of Bear Stearns & Co that focuses on servicing subperforming or nonperforming loans, agreed to pay $895 million for United Cos.' servicing operation, whole loan portfolio, and residual interests. The principals in the deal, which was announced last week, declined to elaborate on the price, but an analyst who covered specialty finance before companies in that sector ran into trouble in 1998 said the assets probably went at a "deep discount to book value."

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