<PAGE>

                                 EXHIBIT 10.1
<PAGE>

    THE                                              Distribution Date: 1/25/00
  BANK OF
   NEW
  YORK

101 Barclay Street - 12E
  New York, NY 10286             HEADLANDS MORTGAGE SECURITIES INC.
                          Mortgage Pass-Through Certificates, Series 1998-3
Attn: Anna Felt         Headlands Mortgage Company, Seller and Master Servicer
   212-815-7166


<TABLE>
<CAPTION>
                                          Certificateholder Monthly Distribution Summary
----------------------------------------------------------------------------------------------------------------------
                                                          Certificate                                        Pass
                                       Class                 Rate                  Beginning               Through
Class             Cusip             Description              Type                   Balance                Rate (%)
----------------------------------------------------------------------------------------------------------------------
<S>             <C>                 <C>                   <C>                    <C>                       <C>
A-1             42209EGD6             Senior              Fix-30/360             206,939,444.48            6.650000
PO              42209EGE4             Strip PO            Fix-30/360                 970,371.40            0.000000
R               42209EGF1             Senior              Fix-30/360                       0.00            6.650000
----------------------------------------------------------------------------------------------------------------------
B-1             42209EGG9             Junior              Fix-30/360               4,507,520.12            6.650000
B-2             42209EGH7             Junior              Fix-30/360               2,028,349.43            6.650000
B-3             42209EGJ3             Junior              Fix-30/360               1,352,265.93            6.650000
B-4             42209EGK0             Junior              Fix-30/360                 788,863.01            6.650000
B-5             42209EGL8             Junior              Fix-30/360                 676,083.50            6.650000
B-6             42209EGM6             Junior              Fix-30/360                 788,914.05            6.650000
----------------------------------------------------------------------------------------------------------------------
Totals                                                                           218,051,811.92
----------------------------------------------------------------------------------------------------------------------

<CAPTION>
----------------------------------------------------------------------------------------------------------------------------
<S>        <C>               <C>                <C>                   <C>                <C>                    <C>
                                                                       Current                                  Cumulative
            Principal          Interest            Total              Realized              Ending               Realized
Class      Distribution      Distribution       Distribution           Losses               Balance              Losses
----------------------------------------------------------------------------------------------------------------------------
A-1        1,878,649.87      1,146,789.42       3,025,439.29              0.00           205,060,794.62              0.00
PO             4,521.82              0.00           4,521.82              0.00               965,849.57              0.00
R                  0.00              0.00               0.00              0.00                     0.00              0.00
----------------------------------------------------------------------------------------------------------------------------
B-1            4,263.67         24,979.17          29,242.85              0.00             4,503,256.45              0.00
B-2            1,918.62         11,240.44          13,159.06              0.00             2,026,430.81              0.00
B-3            1,279.11          7,493.81           8,772.92              0.00             1,350,986.82              0.00
B-4              746.19          4,371.62           5,117.80              0.00               788,116.83              0.00
B-5              639.51          3,746.63           4,386.14              0.00               675,443.99              0.00
B-6              746.24          4,371.90           5,118.13              0.00               788,167.82              0.00
----------------------------------------------------------------------------------------------------------------------------
Totals     1,892,765.03      1,202,992.99       3,095,758.01              0.00           216,159,046.91              0.00
----------------------------------------------------------------------------------------------------------------------------
</TABLE>


                                    Page 1
<PAGE>

  THE                                                 Distribution Date: 1/25/00
BANK OF
  NEW
 YORK

101 Barclay Street - 12E
   New York, NY 10286
                                   HEADLANDS MORTGAGE SECURITIES INC.
   Attn: Anna Felt          Mortgage Pass-Through Certificates, Series 1998-3
        212-815-7166      Headlands Mortgage Company, Seller and Master Servicer

<TABLE>
<CAPTION>
                                                   Principal Distribution Detail
-----------------------------------------------------------------------------------------------------------------------------
                                          Original               Beginning              Scheduled
                                        Certificate             Certificate             Principal               Accretion
Class                Cusip                Balance                 Balance              Distribution             Principal
-----------------------------------------------------------------------------------------------------------------------------
<S>                <C>                 <C>                     <C>                     <C>                      <C>
A-1                42209EGD6           216,562,200.00          206,939,444.48          1,878,649.87                 0.00
PO                 42209EGE4             1,002,393.00              970,371.40              4,521.82                 0.00
R                  42209EGF1                   100.00                    0.00                  0.00                 0.00
-----------------------------------------------------------------------------------------------------------------------------
B-1                42209EGG9             4,556,300.00            4,507,520.12              4,263.67                 0.00
B-2                42209EGH7             2,050,300.00            2,028,349.43              1,918.62                 0.00
B-3                42209EGJ3             1,366,900.00            1,352,265.93              1,279.11                 0.00
B-4                42209EGK0               797,400.00              788,863.01                746.19                 0.00
B-5                42209EGL8               683,400.00              676,083.50                639.51                 0.00
B-6                42209EGM6               797,452.00              788,914.05                746.24                 0.00
-----------------------------------------------------------------------------------------------------------------------------
Totals                                 227,816,445.00          218,051,811.92          1,892,765.03                 0.00
-----------------------------------------------------------------------------------------------------------------------------


<CAPTION>
--------------------------------------------------------------------------------------------------------------------------------
                 Unscheduled              Net                Current                Ending                 Ending
                  Principal            Principal             Realized            Certificate             Certificate
Class            Adjustments          Distribution            Losses               Balance                 Factor
--------------------------------------------------------------------------------------------------------------------------------
<S>              <C>                  <C>                    <C>                <C>                     <C>
A-1                     0.00          1,878,649.87               0.00           205,060,794.62          0.94689098382
PO                      0.00              4,521.82               0.00               965,849.57          0.96354381415
R                       0.00                  0.00               0.00                     0.00          0.00000000000
--------------------------------------------------------------------------------------------------------------------------------
B-1                     0.00              4,263.67               0.00             4,503,256.45          0.98835819626
B-2                     0.00              1,918.62               0.00             2,026,430.81          0.98835819626
B-3                     0.00              1,279.11               0.00             1,350,986.82          0.98835819626
B-4                     0.00                746.19               0.00               788,116.83          0.98835819626
B-5                     0.00                639.51               0.00               675,443.99          0.98835819626
B-6                     0.00                746.24               0.00               788,167.82          0.98835768811
--------------------------------------------------------------------------------------------------------------------------------
Totals                  0.00          1,892,765.03               0.00           216,159,046.91
--------------------------------------------------------------------------------------------------------------------------------
</TABLE>

                                    Page 2
<PAGE>

   THE                                                Distribution Date: 1/25/00
  BANK OF
   NEW
  YORK

101 Barclay Street - 12E
New York, NY 10286
                                    Headlands Mortgage Securities Inc.
Attn: Anna Felt             Mortgage Pass-Through Certificates, Series 1998-3
      212-815-7166        Headlands Mortgage Company, Seller and Master Servicer


<TABLE>
<CAPTION>
                                                   Interest Distribution Detail
-----------------------------------------------------------------------------------------------------------------------------------
                       Beginning                Pass               Accrued               Cumulative
                      Certificate             Through              Optimal                 Unpaid                  Deferred
Class                   Balance               Rate (%)             Interest               Interest                 Interest
-----------------------------------------------------------------------------------------------------------------------------------
<S>                  <C>                     <C>                 <C>                     <C>                       <C>
A-1                  206,939,444.48          6.650000            1,146,789.42                  0.00                    0.00
PO                       970,371.40          0.000000                    0.00                  0.00                    0.00
R                              0.00          6.650000                    0.00                  0.00                    0.00
-----------------------------------------------------------------------------------------------------------------------------------
B-1                    4,507,520.12          6.650000               24,979.17                  0.00                    0.00
B-2                    2,028,349.43          6.650000               11,240.44                  0.00                    0.00
B-3                    1,352,265.93          6.650000                7,493.81                  0.00                    0.00
B-4                      788,863.01          6.650000                4,371.62                  0.00                    0.00
B-5                      676,083.50          6.650000                3,746.63                  0.00                    0.00
B-6                      788,914.05          6.650000                4,371.90                  0.00                    0.00
-----------------------------------------------------------------------------------------------------------------------------------
Totals               218,051,811.92                              1,202,992.99                  0.00                    0.00
-----------------------------------------------------------------------------------------------------------------------------------


<CAPTION>
 ---------------------------------------------------------------------------------------------------
                       Total                   Net              Unscheduled
                      Interest             Prepayment             Interest             Interest
Class                   Due               Int Shortfall          Adjustment              Paid
----------------------------------------------------------------------------------------------------
<S>                 <C>                   <C>                    <C>                 <C>
A-1                 1,146,789.42                   0.00                0.00          1,146,789.42
PO                          0.00                   0.00                0.00                  0.00
R                           0.00                   0.00                0.00                  0.00
----------------------------------------------------------------------------------------------------
B-1                    24,979.17                   0.00                0.00             24,979.17
B-2                    11,240.44                   0.00                0.00             11,240.44
B-3                     7,493.81                   0.00                0.00              7,493.81
B-4                     4,371.62                   0.00                0.00              4,371.62
B-5                     3,746.63                   0.00                0.00              3,746.63
B-6                     4,371.90                   0.00                0.00              4,371.90
----------------------------------------------------------------------------------------------------
Totals              1,202,992.99                   0.00                0.00          1,202,992.99
 ---------------------------------------------------------------------------------------------------
</TABLE>

                                    Page 3
<PAGE>

  THE                                                 Distribution Date: 1/25/00
 BANK OF
  NEW
 YORK

101 Barclay Street - 12E
New York, NY 10286
                                   Headlands Mortgage Securities Inc.
Attn: Anna Felt            Mortgage Pass-Through Certificates, Series 1998-3
      212-815-7166       Headlands Mortgage Company, Seller and Master Servicer



<TABLE>
                                                    Current Payment Information
                                                        Factors per $1,000
---------------------------------------------------------------------------------------------------------------------------------
                           Original        Beginning Cert.                                           Ending Cert.         Pass
                         Certificate          Notional            Principal         Interest          Notional           Through
Class      Cusip           Balance            Balance           Distribution      Distribution         Balance           Rate (%)
---------------------------------------------------------------------------------------------------------------------------------
<S>      <C>            <C>                <C>                  <C>               <C>               <C>                 <C>
A-1      42209EGD6      216,562,200.00       955.565858143       8.674874326       5.295427464      946.890983817       6.650000
PO       42209EGE4        1,002,393.00       968.054841582       4.511027428       0.000000000      963.543814155       0.000000
R        42209EGF1              100.00         0.000000000       0.000000000       0.000000000        0.000000000       6.650000
---------------------------------------------------------------------------------------------------------------------------------
B-1      42209EGG9        4,556,300.00       989.293971842       0.935775583       5.482337427      988.358196259       6.650000
B-2      42209EGH7        2,050,300.00       989.293971842       0.935775583       5.482337427      988.358196259       6.650000
B-3      42209EGJ3        1,366,900.00       989.293971842       0.935775583       5.482337427      988.358196259       6.650000
B-4      42209EGK0          797,400.00       989.293971842       0.935775583       5.482337427      988.358196259       6.650000
B-5      42209EGL8          683,400.00       989.293971842       0.935775583       5.482337427      988.358196259       6.650000
B-6      42209EGM6          797,452.00       989.293463209       0.935775102       5.482334609      988.357688107       6.650000
---------------------------------------------------------------------------------------------------------------------------------
Totals                  227,816,445.00       957.138155325       8.308289729       5.280536223      948.829865684
---------------------------------------------------------------------------------------------------------------------------------
</TABLE>

                                    Page 4
<PAGE>

   THE
 BANK OF
   NEW
  YORK

101 Barclay Street - 12E
New York, NY 10286
                                    Headlands Mortgage Securities Inc.
Attn: Anna Felt               Mortage Pass-Through Certificates, Series 1998-3
      212-815-7166        Headlands Mortage Company, Seller and Master Servicer

<TABLE>
<CAPTION>
Pool Level Data
<S>                                         <C>                                             <C>
Distribution Date                                                                             1/25/00
Cut-off Date                                                                                 12/ 1/98
Determination Date                                                                            1/ 1/00
Accrual Period                              Begin                                            12/ 1/99
                                            End                                               1/ 1/00
Number of Days in Accrual Period                                                                   31


---------------------------------------------------------------------------
                            COLLATERAL INFORMATION
---------------------------------------------------------------------------
<CAPTION>
Group 1
-------
<S>                                                                                    <C>
Cut-Off Date Balance                                                                   227,816,444.00

Beginning Aggregate Pool Stated Principal Balance                                      218,051,812.35
Ending Aggregate Pool Stated Principal Balance                                         216,159,047.32

Beginning Aggregate Certificate Stated Principal Balance                               218,051,811.93
Ending Aggregate Certificate Stated Principal Balance                                  216,159,046.90

Beginning Aggregate Loan Count                                                                    826
Loans Paid Off or Otherwise Removed Pursuant to Pooling and Servicing Aggrement                     3
Ending Aggregate Loan Count                                                                       823

Beginning Weighted Average Loan Rate (WAC)                                                   7.153951%
Ending Weighted Average Loan Rate (WAC)                                                      7.153807%

Beginning Net Weighted Average Loan Rate                                                     6.895449%
Ending Net Weighted Average Loan Rate                                                        6.895305%

Aggregate Pool Prepayment                                                                1,686,469.19
Pool Prepayment Rate                                                                       8.8963 CPR


---------------------------------------------------------------------------
                            CERTIFICATE INFORMATION
---------------------------------------------------------------------------

<CAPTION>
Group 1
-------

Senior Percentage                                                                       95.3280225044%
Senior Prepayment Percentage                                                           100.0000000000%

Subordinate Percentage                                                                   4.6719774956%
Subordinate Prepayment Percentage                                                        0.0000000000%


Prepayment Compensation
Total Gross Prepayment Interest Shortfall                                                        0.00
Compensation for Gross PPIS from Servicing Fees                                                  0.00
Other Gross PPIS Compensation                                                                    0.00
                                                                                                 ----
</TABLE>


                                    Page 1
<PAGE>

        THE
      BANK OF
        NEW
       YORK

101 Barclay Street - 12E
New York, NY 10286

Attn: Anna Felt
      212-815-7166
                      Headlands Mortgage Securities Inc.
               Mortgage Pass-Through Certificates, Series 1998-3
            Headlands Mortgage Company, Seller and Master Servicer

<TABLE>
<S>                                                                                                                    <C>
                                                                                                                       ---------
Total Net PPIS (Non-Supported PPIS)                                                                                         0.00


Master Servicing Fees Paid                                                                                             95,405.52
Sub Servicing Fees Paid                                                                                                     0.39
Trustee Fees Paid                                                                                                       1,544.53
                                                                                                                       ---------
Total Fees                                                                                                             96,950.45
</TABLE>


-----------------------------------------------
          Delinquency Information
-----------------------------------------------

<TABLE>
<CAPTION>
Group 1
-------

Delinquency                                                                     30 - 59 Days   60 - 89 Days   90+ Days    Totals
-----------                                                                     ------------   ------------   --------    ------
<S>                                                                             <C>            <C>           <C>         <C>
Scheduled Principal Balance                                                          0.00           0.00     58,772.74   58,772.74
Percentage of Total Pool Balance                                                 0.000000%      0.000000%     0.027190%   0.027190%
Number of Loans                                                                         0              0             1           1
Percentage of Total Loans                                                        0.000000%      0.000000%     0.121507%   0.121507%

Foreclosure
-----------
Scheduled Principal Balance                                                          0.00           0.00          0.00        0.00
Percentage of Total Pool Balance                                                 0.000000%      0.000000%     0.000000%   0.000000%
Number of Loans                                                                         0              0             0           0
Percentage of Total Loans                                                        0.000000%      0.000000%     0.000000%   0.000000%

Bankruptcy
----------
Scheduled Principal Balance                                                          0.00           0.00          0.00        0.00
Percentage of Total Pool Balance                                                 0.000000%      0.000000%     0.000000%   0.000000%
Number of Loans                                                                         0              0             0           0
Percentage of Total Loans                                                        0.000000%      0.000000%     0.000000%   0.000000%

Reo
---
Scheduled Principal Balance                                                          0.00           0.00          0.00        0.00
Percentage of Total Pool Balance                                                 0.000000%      0.000000%     0.000000%   0.000000%
Number of Loans                                                                         0              0             0           0
Percentage of Total Loans                                                        0.000000%      0.000000%     0.000000%   0.000000%

Book Value of all REO Loans                                                                                                   0.00
Percentage of Total Pool Balance                                                                                          0.000000%

Current Realized Losses                                                                                                       0.00
</TABLE>

                                    Page 2
<PAGE>

      THE
     BANK OF
      NEW
     YORK

101 Barclay Street - 12E
New York, NY 10286

                      HEADLANDS MORTGAGE SECURITIES INC.
Attn: Anna Felt
      212-815-7166  Mortgage Pass-Through Certificates, Series 1998-3
            Headlands Mortgage Company, Seller and Master Servicer

<TABLE>
<S>                                                                                                          <C>
Additional Gains (Recoveries)/Losses                                                                         0.00
Total Realized Losses                                                                                        0.00
</TABLE>


--------------------------------------------------------
     Subordination/Credit Enhancement Information
--------------------------------------------------------

<TABLE>
<CAPTION>
Protection                                                                            Original         Current
----------                                                                            --------         -------
<S>                                                                               <C>              <C>
Bankruptcy Loss                                                                       100,000.00             0.00
Bankruptcy Percentage                                                                   0.043895%        0.000000%
Credit/Fraud Loss                                                                   2,278,164.00     2,278,164.00
Credit/Fraud Loss Percentage                                                            1.000000%        1.053930%
Special Hazard Loss                                                                 3,919,310.00     3,876,540.85
Special Hazard Loss Percentage                                                          1.720381%        1.793374%

Credit Support                                                                        Original         Current
--------------                                                                        --------         -------
Class A                                                                           217,564,693.00   206,026,644.19
Class A Percentage                                                                     95.499995%       95.312524%

Class B-1                                                                           4,556,300.00     4,503,256.45
Class B-1 Percentage                                                                    1.999987%        2.083307%

Class B-2                                                                           2,050,300.00     2,026,430.81
Class B-2 Percentage                                                                    0.899979%        0.937472%

Class B-3                                                                           1,366,900.00     1,350,986.82
Class B-3 Percentage                                                                    0.600001%        0.624997%

Class B-4                                                                             797,400.00       788,116.83
Class B-4 Percentage                                                                    0.350019%        0.364600%

Class B-5                                                                             683,400.00       675,443.99
Class B-5 Percentage                                                                    0.299978%        0.312475%

Class B-6                                                                             797,452.00       788,167.82
Class B-6 Percentage                                                                    0.350041%        0.364624%
</TABLE>

                                    Page 3