Much has been made of the development of an exclusive club of companies servicing $100 billion or more of mortgages. Indeed, some observers say the club will grow and dominate the business.

But it's also possible that membership will, in effect, be frozen soon after NationsBank Corp. completes its acquisition of Seamen's Bancorp this year.

The next logical candidate for membership is HomeSide Lending Corp., the joint venture of Barnett Banks Inc., Bank of Boston Corp., and a venture capital partner. HomeSide has made no bones about its ambition to expand through acquisition and join the $100 billion club. It now has $79.9 billion.

HomeSide might turn out to be the last new member. The mortgage business is in transition. Prudential Insurance Company of America, which could have joined the club this year, decided in 1995 that it wanted to get out of the business, as did Sears, Roebuck and Co. a few years ago.

Major thrifts have also said they are substantially withdrawing from the mortgage business as portfolio investors but will continue to do mortgage banking and servicing. Among the giants, Home Savings of America showed a slight shrinkage of its servicing portfolio, and Great Western Bank showed a tiny gain.

The only company besides HomeSide within possible striking distance of $100 billion is BankAmerica Mortgage, at about $76 billion of servicing. After that, there is a big drop, to $60 billion at GMAC Mortgage Corp.

It remains unclear how many big companies with mortgage units want to continue to go it alone in servicing. Conceivably, some could join Prudential in exiting.

The Barnett-Bank of Boston venture has attracted a lot of attention, and many observers have said it could be a model for future deals. So if any big servicer decides on an exit, a joint venture could well be the route it takes.


Salomon Brothers analysts have detected a rather esoteric sign that the housing market may finally be slowing down.

In a bond market strategy report last week, the mortgage specialists said prepayment speeds on Fannie Mae and Freddie Mac loans had slowed in September at a far greater rate than could be explained by seasonal factors.

"Given the close relation between discount speeds and home sales," the report said, "the surprisingly large declines suggest that the long anticipated slowdown in the housing market that never materialized may finally be arriving."

A confirming factor, the report said, was that the Mortgage Bankers Association's index of purchase-loan volume fell 10% for the month, dropping below the level of a year before for the first time this year.

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