<PAGE>

                                                                    Exhibit 10.1

          THE                                        Distribution Date: 2/25/00
        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>
                                          Certificateholder Monthly Distribution Summary
----------------------------------------------------------------------------------------------------------------------------------
                                   Certificate                    Pass                                                  Current
                        Class         Rate        Beginning      Through     Principal      Interest        Total       Realized
  Class     Cusip    Description      Type         Balance       Rate (%)   Distribution  Distribution   Distribution    Losses
----------------------------------------------------------------------------------------------------------------------------------
<S>       <C>        <C>           <C>           <C>             <C>        <C>           <C>            <C>            <C>
   A-1    42209EGD6    Senior      Fix-30/360    205,060,794.62    6.650000  1,028,164.70  1,136,378.57   2,164,543.27        0.00
   PO     42209EGE4   Strip PO     Fix-30/360        965,849.57    0.000000      1,246.89          0.00       1,246.89        0.00
    R     42209EGF1    Senior      Fix-30/360              0.00    6.650000          0.00          0.00           0.00        0.00
----------------------------------------------------------------------------------------------------------------------------------
   B-1    42209EGG9    Junior      Fix-30/360      4,503,256.45    6.650000      4,317.41     24,955.55      29,272.96        0.00
   B-2    42209EGH7    Junior      Fix-30/360      2,026,430.81    6.650000      1,942.80     11,229.80      13,172.61        0.00
   B-3    42209EGJ3    Junior      Fix-30/360      1,350,986.82    6.650000      1,295.23      7,486.72       8,781.95        0.00
   B-4    42209EGK0    Junior      Fix-30/360        788,116.83    6.650000        755.59      4,367.48       5,123.07        0.00
   B-5    42209EGL8    Junior      Fix-30/360        675,443.99    6.650000        647.57      3,743.09       4,390.65        0.00
   B-6    42209EGM6    Junior      Fix-30/360        788,167.82    6.650000        755.64      4,367.76       5,123.40        0.00
----------------------------------------------------------------------------------------------------------------------------------

 Totals                                          216,159,046.91              1,039,125.83  1,192,528.97   2,231,654.80        0.00
----------------------------------------------------------------------------------------------------------------------------------

<CAPTION>
----------------------------------------------------------------------------------------------------------------------------------
                                  Cumulative
                     Ending        Realized
  Class             Balance        Losses
----------------------------------------------------------------------------------------------------------------------------------
<S>               <C>             <C>
   A-1            204,032,629.92       0.00
   PO                 964,602.68       0.00
    R                       0.00       0.00
----------------------------------------------------------------------------------------------------------------------------------
   B-1              4,498,939.04       0.00
   B-2              2,024,488.01       0.00
   B-3              1,349,691.58       0.00
   B-4                787,361.23       0.00
   B-5                674,796.42       0.00
   B-6                787,412.17       0.00
----------------------------------------------------------------------------------------------------------------------------------

 Totals           215,119,921.05       0.00
----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>

  THE                                                 Distribution Date: 2/25/00
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   205,060,794.62   1,028,164.70    0.00
  PO      42209EGE4     1,002,393.00       965,849.57       1,246.89    0.00
   R      42209EGF1           100.00             0.00           0.00    0.00
--------------------------------------------------------------------------------

  B-1     42209EGG9     4,556,300.00     4,503,256.45       4,317.41    0.00
  B-2     42209EGH7     2,050,300.00     2,026,430.81       1,942.80    0.00
  B-3     42209EGJ3     1,366,900.00     1,350,986.82       1,295.23    0.00
  B-4     42209EGK0       797,400.00       788,116.83         755.59    0.00
  B-5     42209EGL8       683,400.00       675,443.99         647.57    0.00
  B-6     42209EGM6       797,452.00       788,167.82         755.64    0.00
--------------------------------------------------------------------------------
 Totals               227,816,445.00   216,159,046.91   1,039,125.83    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      1,028,164.70      0.00    204,032,629.92   0.94214331919
  PO        0.00          1,246.89      0.00        964,602.68   0.96229990034
   R        0.00              0.00      0.00              0.00   0.00000000000
--------------------------------------------------------------------------------

  B-1       0.00          4,317.41      0.00      4,498,939.04   0.98741062616
  B-2       0.00          1,942.80      0.00      2,024,488.01   0.98741062616
  B-3       0.00          1,295.23      0.00      1,349,691.58   0.98741062616
  B-4       0.00            755.59      0.00        787,361.23   0.98741062616
  B-5       0.00            647.57      0.00        674,796.42   0.98741062616
  B-6       0.00            755.64      0.00        787,412.17   0.98741011849
--------------------------------------------------------------------------------
Totals      0.00      1,039,125.83      0.00    215,119,921.05
--------------------------------------------------------------------------------
</TABLE>

                                    Page 2

<PAGE>

        THE                                           Distribution Date: 2/25/00
      BANK OF
     NEW YORK

101 Barclay Street - 12E
New York, NY 10286

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

                         Interest Distribution Detail

<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------------------------------
              Beginning       Pass      Accrued    Cumulative                Total           Net       Unscheduled
             Certificate    Through     Optimal      Unpaid    Deferred     Interest     Prepayment      Interest     Interest
Class          Balance      Rate (%)    Interest    Interest   Interest       Due       Int Shortfall   Adjustment      Paid
---------------------------------------------------------------------------------------------------------------------------------
<S>         <C>             <C>       <C>          <C>         <C>        <C>           <C>            <C>           <C>
 A-1        205,060,794.62  6.650000  1,136,378.57    0.00       0.00     1,136,378.57       0.00          0.00      1,136,378.57
 PO             965,849.57  0.000000          0.00    0.00       0.00             0.00       0.00          0.00              0.00
 R                    0.00  6.650000          0.00    0.00       0.00             0.00       0.00          0.00              0.00
---------------------------------------------------------------------------------------------------------------------------------

 B-1          4,503,256.45  6.650000     24,955.55    0.00       0.00        24,955.55       0.00          0.00         24,955.55
 B-2          2,026,430.81  6.650000     11,229.80    0.00       0.00        11,229.80       0.00          0.00         11,229.80
 B-3          1,350,986.82  6.650000      7,486.72    0.00       0.00         7,486.72       0.00          0.00          7,486.72
 B-4            788,116.83  6.650000      4,367.48    0.00       0.00         4,367.48       0.00          0.00          4,367.48
 B-5            675,443.99  6.650000      3,743.09    0.00       0.00         3,743.09       0.00          0.00          3,743.09
 B-6            788,167.82  6.650000      4,367.76    0.00       0.00         4,367.76       0.00          0.00          4,367.76
---------------------------------------------------------------------------------------------------------------------------------

Totals      216,159,046.91            1,192,528.97    0.00       0.00     1,192,528.97       0.00          0.00      1,192,528.97
---------------------------------------------------------------------------------------------------------------------------------
</TABLE>

                                     Page 3
<PAGE>

<TABLE>
<CAPTION>
          THE                                                                                             Distribution Date: 2/25/00
        BANK OF
          NEW
          YORK

101 Barclay Street - 12E
   New York, NY 10286

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

                                                    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       946.890983817    4.747664626   5.247354202  942.143319191  6.650000
     PO              42209EGE4    1,002,393.00       963.543814155    1.243913814   0.000000000  962.299900340  0.000000
     R               42209EGF1          100.00         0.000000000    0.000000000   0.000000000    0.000000000  6.650000
------------------------------------------------------------------------------------------------------------------------
     B-1             42209EGG9    4,556,300.00       988.358196259    0.947570103   5.477151671  987.410626156  6.650000
     B-2             42209EGH7    2,050,300.00       988.358196259    0.947570103   5.477151671  987.410626156  6.650000
     B-3             42209EGJ3    1,366,900.00       988.358196259    0.947570103   5.477151671  987.410626156  6.650000
     B-4             42209EGK0      797,400.00       988.358196259    0.947570103   5.477151671  987.410626156  6.650000
     B-5             42209EGL8      683,400.00       988.358196259    0.947570103   5.477151671  987.410626156  6.650000
     B-6             42209EGM6      797,452.00       988.357688107    0.947569616   5.477148855  987.410118491  6.650000
------------------------------------------------------------------------------------------------------------------------
   Totals                       227,816,445.00       948.829865684    4.561241529   5.234604420  944.268624023
------------------------------------------------------------------------------------------------------------------------
</TABLE>

                                    Page 4
<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>
Pool Level Data

Distribution Date                                                                                2/25/00
Cut-off Date                                                                                     12/1/98
Determination Date                                                                                2/1/00
Accrual Period                      Begin                                                         1/1/00
                                    End                                                           2/1/00
Number of Days in Accrual Period                                                                      31

-------------------------------------------------------------------------
                       Collateral Information
-------------------------------------------------------------------------

Group 1
-------
Cut-Off Date Balance                                                                      227,816,444.00

Beginning Aggregate Pool Stated Principal Balance                                         216,159,047.32
Ending Aggregate Pool Stated Principal Balance                                            215,119,921.48

Beginning Aggregate Certificate Stated Principal Balance                                  216,159,046.90
Ending Aggregate Certificate Stated Principal Balance                                     215,119,921.06

Beginning Aggregate Loan Count                                                                       823
Loans Paid Off or Otherwise Removed Pursuant to Pooling and Servicing Agreement                        4
Ending Aggregate Loan Count                                                                          819

Beginning Weighted Average Loan Rate (WAC)                                                      7.153807%
Ending Weighted Average Loan Rate (WAC)                                                         7.152252%

Beginning Net Weighted Average Loan Rate                                                        6.895305%
Ending Net Weighted Average Loan Rate                                                           6.893750%

Aggregate Pool Prepayment                                                                     831,848.05
Pool Prepayment Rate                                                                          4.5215 CPR

-------------------------------------------------------------------------
                       Certificate Information
-------------------------------------------------------------------------

Group 1
-------

Senior Percentage                                                                          95.2914855879%
Senior Prepayment Percentage                                                              100.0000000000%

Subordinate Percentage                                                                      4.7085144121%
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
                               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>
     <S>                                            <C>                    <C>                <C>             <C>

     Total Net PPIS (Non-Supported PPIS)                                                                           ----
                                                                                                                   0.00
     Master Servicing Fees Paid
     Sub Servicing Fees Paid                                                                                  94,573.01
     Trustee Fees Paid                                                                                             0.41
                                                                                                               1,531.13
     Total Fees                                                                                               ---------
                                                                                                              96,104.55
     -------------------------------------------------------------------------------
                               Delinquency Information
     -------------------------------------------------------------------------------
     Group 1
     -------

     Delinquency                                    30 - 59 Days           60 - 89 Days       90+ Days           Totals
     -----------                                    ------------           ------------       --------           ------

     Scheduled Principal Balance                            0.00                   0.00       58,772.74       58,772.74
     Percentage of Total Pool Balance                   0.000000%              0.000000%       0.027321%       0.027321%
     Number of Loans                                           0                      0               1               1
     Percentage of Total Loans                          0.000000%              0.000000%       0.122100%       0.122100%

     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         Mortgage Pass-Through Certificates, Series 1998-3
      212-815-7166   Headlands Mortgage Company, Seller and Master Servicer
<TABLE>
<CAPTION>
<S>                                                                                          <C>                    <C>
     Additional Gains (Recoveries)/Losses                                                                                     0.00
     Total Realized Losses                                                                                                    0.00

     --------------------------------------------------------------------------------
                    Subordination/Credit Enhancement Information
     --------------------------------------------------------------------------------
     Protection                                                                                    Original                Current
     ----------                                                                                    --------                -------

     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%              1.059020%
     Special Hazard Loss                                                                       3,919,310.00           3,872,769.44
     Special Hazard Loss Percentage                                                                1.720381%              1.800284%

     Credit Support                                                                                Original                Current
     --------------                                                                                --------                -------

     Class A                                                                                 217,564,693.00         204,997,232.60
     Class A Percentage                                                                           95.499995%             95.294397%

     Class B-1                                                                                 4,556,300.00           4,498,939.04
     Class B-1 Percentage                                                                          1.999987%              2.091363%

     Class B-2                                                                                 2,050,300.00           2,024,488.01
     Class B-2 Percentage                                                                          0.899979%              0.941097%

     Class B-3                                                                                 1,366,900.00           1,349,691.58
     Class B-3 Percentage                                                                          0.600001%              0.627414%

     Class B-4                                                                                   797,400.00             787,361.23
     Class B-4 Percentage                                                                          0.350019%              0.366010%

     Class B-5                                                                                   683,400.00             674,796.42
     Class B-5 Percentage                                                                          0.299978%              0.313684%

     Class B-6                                                                                   797,452.00             787,412.17
     Class B-6 Percentage                                                                          0.350041%              0.366034%
</TABLE>

                                    Page 3