DES MOINES - After months of rumors that Wells Fargo Home Mortgage may acquire GE Capital Mortgage Services or enter a subservicing agreement, the two companies acknowledged Monday that they are negotiating.

"We are in discussions with GE Capital about a possible transaction, and we're making progress in these discussions," a spokesman for the Wells unit said. "We hope to reach an agreement in the near future, but there is no assurance that there will be a definitive agreement."

A spokesman for the General Electric Co. unit issued a similar statement. The two companies are said to have considered either an outright sale or a subservicing agreement, in which the Cherry Hill, N.J., GE unit would retain its portfolio of servicing rights on $82 billion of home loans, but Wells would service the loans. Taking over the GE portfolio would push Wells, currently the No. 3 servicer, past Bank of America and Chase Manhattan Mortgage to the top spot.

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