Firms Negotiating to Buy Mortgage Bank in Irvine : Finance: BankAmerica Corp. is one of companies interested in Shearson Lehman Mortgage, a lender and loan servicer.

BankAmerica Corp. is one of a handful of companies negotiating to purchase Shearson Lehman Mortgage, one of the nation’s largest mortgage bankers and loan servicers, a source close to the negotiations said Monday.

The San Francisco holding company for Bank of America would triple its servicing portfolio by acquiring the Irvine mortgage banker from its parent firm, Shearson Lehman Bros., a New York brokerage and investment banker.

Among “four or five” other bidders for the mortgage unit are General Electric Capital Corp. and Sears, Roebuck & Co., said the source, who did not want to be identified.

In addition, another source said a management buyout of the profitable subsidiary also is being considered. The biggest roadblock to a buyout, though, is obtaining financing.

“Several parties have expressed an interest, and talks are continuing,” Steven Faigen, a spokesman for the brokerage, said Monday. He declined to identify the bidders and would say only that negotiations with all bidders are in preliminary stages. BankAmerica executives would not comment.

Walter Blass, chairman of the unit, also would not comment on any pending sale, but he said that Shearson Lehman Mortgage has been on the block before and the parent company would sell it only if it can get the price it wants.

No sale price has been mentioned for the subsidiary, which has more than 500 employees and took in $92 million in revenue last year, according to Standard & Poor’s Corp., a business rating and information firm.

Bank of America has been stepping up its mortgage lending operations in the last year or so, but the acquisition of the Shearson unit would add to its effort significantly.

Shearson Lehman Mortgage expects to fund $2 billion to $2.5 billion in loans this year, with its big seller being a home-equity loan offered at the prime rate--what banks give their best customers--and geared mainly to more affluent borrowers, who could tolerate market-driven mortgage adjustments.

It also operates one of the more highly efficient servicing operations, which bills borrowers and collects payments on loans for both itself and other lenders. That portfolio now manages more than $20 billion in loans.

At the end of last year, Shearson Lehman Mortgage’s servicing portfolio stood at $18 billion, ranking it as the ninth largest servicer in the nation. Bank of America, with $9.5 billion in loan servicing, wasn’t on the list of the top 25, according to American Banker, a trade publication.

The Shearson unit went on the block after its parent company decided last year that mortgage banking was not part of its core business. Shearson Lehman Bros. began selling off or winding down its real estate operations after Howard Clark Jr. became chairman and chief executive of the brokerage in February, 1990, and the firm decided to concentrate on its core brokerage, investment banking business.

At first, the mortgage banking operation was part of the protected operations not to be sold. But sources said the parent firm decided that some other company would find it a more valuable property.

In addition, the sale of the unit would reduce the credit risk that the parent company is exposed to.