North American Mortgage Co., one of the few remaining independent mortgage companies, reported that December was its biggest month for closing loans last year.

The lender funded $862 million in loans during the month, a 64% increase from December 1994 closings. Loan applications totaled $1.25 billion in the month, a 99% increase.

North American also sold $1 billion in servicing rights during December, said Terrance G. Hodel, president and chief operating officer.

"These sales allowed us to take advantage of some excellent pricing opportunities in the servicing market," he said in a statement.

The company sold servicing rights throughout the year, bringing its portfolio to $14.1 billion in December 1995. That is down 5% from the company's total servicing at the end of last year.

The portfolio has an average weighted coupon of 7.73%, and a delinquency rate, including foreclosures, of 3.06%.

Refinancings represented 43% of closed loans and 52% of loan applications in December.

"Fundings for the month were at the highest level since April 1994," said John F. Farrell Jr., chairman and chief executive of North American, in a prepared statement. "Typically, the first quarter of the year is slow due to seasonal conditions, but with the strong December application volume and the potential for more refinance activity, the company finds itself with an excellent head start going into 1996 compared with 1995," Mr. Farrell said.

Jonathan Gray, an analyst at Sanford C. Bernstein & Co., said North American had a strong fourth quarter, with about a 1.1% market share in a $650 billion total annual market.

The company sold 5% of its servicing portfolio in the fourth quarter. Mr. Gray said that should add to North American's annual earnings.

The current interest rate environment makes fixed-rate loans more attractive than adjustables, which benefits mortgage companies. Mortgage banks produce mostly fixed-rate loans, which they sell in the secondary market, while savings and loans primarily originate adjustable-rate loans, which they hold in portfolio.

"Mortgage bankers are in a good position, because there is an even flatter yield curve (than in past months) and there is no reason on earth to have an ARM," said Richard K. Strauss, a securities analyst at Goldman, Sachs & Co., New York.

"Typically you'd expect December to be a slow month with the holidays," Mr. Strauss said. "But the fixed-rate product is where it's at, and their production numbers reflect that, as do Countrywide's."

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