By JAMES H. SAFT

Takeover fever swept the mortgage industry Monday as Margaretten Financial Corp. put itself on the auction block.

Margaretten, a nationwide home lender based in Perth Amboy, N.J., said it was talking with "several major financial institutions" about a sale of the company. It said it had retained Goldman, Sachs & Co. to handle the effort.

The announcement lifted the stocks of virtually all publicly traded mortgage banks, as experts speculated that other companies might be sold. American Residential Holdings and North American Mortgage posted especially big gains.

Margaretten's shares jumped $4.125, closing at $19.125.

With rising interest rates curbing consumer demand for mortgages, several major mortgage banks already have put themselves up for sale. Meanwhile, a number of commercial banks are on the prowl as buyers, drawn by the fee income available from mortgage servicing.

Margaretten did not name the potential buyers, but Bank-America Corp., Chemical Banking Corp., and First Tennessee National Corp. are all said to be scouting for acquisitions.

Margaretten, which has offices in 20 states and processes monthly payments on about $15.6 billion of mortgages, is one of the biggest mortgage banks to be put on the block. At Monday's share price, it has a stock-market value of $256 million.

Felix M. Beck, chairman of Margaretten, declined to say whether the company had initially been approached or had sought out bidders.

Other companies that recently put themselves on the market include Arbor National Mortgage, Westbury, N.Y.; Lomas Financial, Dallas; and the mortgage unit of U.S. Bancorp, Portland.

Mortgage companies, experts say, are moving to sell themselves because of deteriorating market conditions. The companies apparently fear that the industry is moving into an extended period of lower originations and heavy price competition.

Also, there is a growing realization that the future will belong to the huge companies with massive capital, analysts said.

Though Margaretten ranks among the country's top 15 mortgage originators and top 25 servicers, it is not nearly as large or as well capitalized as such giants as Countrywide Credit Industries, Pasadena, Calif., and Prudential Home Mortgage Corp., Clayton, Mo.

"I think middle-size mortgage companies are in a heap of trouble," said a top executive at a major mortgage bank. "Technology costs are high - it's expensive to lower your cost per mortgage. But if you don't, you are increasingly behind Prudential and Countrywide."

Sy Jacobs, an analyst at Baltimore-based Alex. Brown & Sons, maintains that the rising number of companies trying to sell themselves reflects undervaluation by the stock market.

Using the recent purchase of Loan America Financial by Barnett Banks as a measure, he believes that Margaretten could command between $24 and $27 a share in sale. At $25 per share, Margaretten would fetch a total of $333 million, or 67% above its stock market value at Friday's close.

American Residential, based in La Jolla, Calif., saw its stock price jump $2.12 a share Monday, to $17.87 The shares of North American, Santa Rosa, Calif., rose $1.62 to $24.

"None of the public mortgage companies is too big for a bank to buy," said an investment banker.

Margaretten was sold to the public in early 1992 by Primerica Corp., its former parent. The stock fell quickly from its initial offering price of $20 per share and has stayed below that level.

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