Six bidders are vying to buy a large mortgage servicing operation from NationsBank Corp., according to mortgage industry sources.

The Richmond-based unit processes monthly payment on about $8 billion of mortgages and could fetch a price of more than $120 million. Its sale would represent one of the biggest servicing deals in recent years.

Though NationBank is keeping the identities of the bidders under tight wraps, sources identified two of them as Margaretten Financial, Perth Amboy, N.J., and BancPlus Mortgage, San Antonio. Both are independent companies.

At least one commercial bank and some investor groups are also said to be among the bidders.

Officials at Margaretten and BancPlus declined to comment.

NationsBank officials accepted final bids this week for the operation and hope to close a deal by late summer.

The Virginia servicing unit had been part of C&S/Sovran Corp. and was formerly known as Sovran Mortgage.

NationsBank, based in North Carolina, was formed at the end of last year by the merger of NCNB Corp. and C&S/Sovran Corp.

Even if the unit were sold, NationsBank would remain a power in the mortgage industry. Excluding the Virginia portfolio, it now services about $25.5 billion of mortgages, ranking it among the top 15 servicers in the country.

C&S/Sovran operated two servicing centers, one of which was folded into an NCNB facility in Louisville, Ky. The Virginia unit was considered too large for the Louisville facility, which has been busy digesting a series of earlier acquisitions.

Facilities, Staff Included

Bid prices for the Virgina unit could not be learned, but servicing rights often sell for 1.5% of the mortgages being serviced. That suggests the portfolio might be worth $120 million. the package also includes facilities and a staff of about 300.

Analysts caution that NationsBank is unlikely to realize a big gain on the sale.

"It will be a mild positive - and I think mild is the operative word," said Susan Leadem, an analyst at Robinson Humphrey Co., Atlanta.

Nonetheless, the planned transaction is significant for the mortgage industry. Excluding sales of companies by the government's Resolution Trust Corp., it would rank as one of the largest sales of a private servicing company in the past few years.

Narrowing the Field

NationsBank, using an in-house team of investment bankers, attracted more than 15 initial bidders for the Virginia mortgage unit. It then winnowed the field to six, based on the bidders' financial resources and willingness to acquire all the assets, said Christopher Gilson, NationsBank's top mortgage executive.

"It's an interesting mixture of companies," he said of the bidders. All of them, he added, "are highly capable of making the purchase."

Margaretten, one of the reported bidders, has made no secret of its ambitions to expand in servicing. The company, which was spun off from Primerica Corp. earlier this year in an initial public offering, currently services about $5 billion of loans. That's up from about $4 billion at the beginning of the year.

BancPlus Mortgage, which now services about $10 billion of home loans, was purchased from the RTC last year by a group led by its senior management. The group was backed in part by Texas billionaire Sid Bass.

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