UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-Q

                                   (Mark one)
          [x ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                      SECURITIES AND EXCHANGE ACT OF 1934

                For the quarterly period ended November 30, 1997

                                       OR

          [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                        SECURITIES EXCHANGE ACT OF 1934

                           Commission File No. 1-12655

                                 HomeSide, Inc.
             (Exact name of registrant as specified in its charter)

                                    Delaware
         (State or other jurisdiction of incorporation or organization)

                                   59-3387041
                      (I.R.S. Employer Identification No.)
 
                   7301 Baymeadows Way, Jacksonville, FL 32256
               (Address of principal executive offices) (Zip Code)
 

                                 (904) 281-3000
              (Registrant's telephone number, including area code)



Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 12 months (or for such  shorter  period that the  registrant  was
required  to file  such  reports),  and  (2) has  been  subject  to such  filing
requirements for the past 90 days. Yes _x_ No __



Indicate the number of shares  outstanding  of each of the  issuer's  classes of
common stock, as of the latest practicable date.

                                                          Outstanding at 
           Class                                         December 29, 1997
           -----                                         -----------------
Common stock $0.01 par value                                  43,375,430
Class C non-voting common stock $1.00 par value                   97,138

                                       1
<PAGE>
                              FINANCIAL INFORMATION

ITEM 1.  Financial Statements

<TABLE>

                         HOMESIDE, INC. and SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEET

                    (Dollars in Thousands, Except Share Data)
<CAPTION>                                                            
                                                                                Unaudited)
                                                                             November 30, 1997       February 28, 1997
                                                                             -----------------       -----------------              
<S>                                                                          <C>                     <C>   
ASSETS

Cash and cash equivalents                                                      $    16,590             $    52,691
                                                                                    
Mortgage loans held for sale, net                                                  984,706                 805,274
Mortgage servicing rights, net                                                   1,748,806               1,614,307
Accounts receivable, net                                                           252,823                 157,518
Early pool buyout advances                                                         311,616                      --              
Premises and equipment, net                                                         35,414                  29,515
Other assets                                                                       164,566                  92,877
                                                                              -------------          -------------- 
Total Assets                                                                   $ 3,514,521             $ 2,752,182
                                                                              =============          ==============

LIABILITIES AND STOCKHOLDERS' EQUITY

Notes payable                                                                  $ 1,732,649             $ 1,818,503
Accounts payable and accrued liabilities                                           140,550                 140,304
Deferred income taxes                                                              169,572                 129,951
Long-term debt                                                                     900,671                 151,128
                                                                              -------------           -------------      
Total Liabilities                                                                2,943,442               2,239,886

Common stock:
     Common stock, $.01 par value, 119,610,000 shares authorized and
         43,375,430 shares issued and outstanding                              $       434             $       434
     Class C non-voting common stock, $1.00 par value, 195,000 shares
         authorized, and 97,138 shares issued and outstanding                           97                      97
Additional paid-in capital                                                         476,646                 476,646
Retained earnings                                                                   95,732                  36,969
                                                                              -------------           ------------- 
                                                                                   572,909                 514,146
Less: Notes received in payment for capital stock                                   (1,830)                 (1,850)
                                                                              -------------           -------------            
Total Stockholders' Equity                                                         571,079                 512,296
                                                                              -------------           -------------
Total Liabilities and Stockholders' Equity                                     $ 3,514,521              $2,752,182
                                                                              =============           =============
</TABLE>

                 The accompanying notes are an integral part of
                          these financial statements.




                                       2
<PAGE>
<TABLE>

                         HOMESIDE, INC. and SUBSIDIARIES
                        CONSOLIDATED STATEMENTS OF INCOME
                                   (UNAUDITED)

                    (Dollars in Thousands, Except Share Data)


<CAPTION>


                                                    For the Three        For the Three        For the Nine       For the Period
                                                    Months Ended         Months Ended         Months Ended              from
                                                    November 30,         November 30,         November 30,       March 16, 1996 to
                                                        1997                 1996                 1997           November 30, 1996
                                                    -------------        --------------       -------------      -----------------
<S>                                                 <C>                  <C>                  <C>                <C>
REVENUES:

Mortgage servicing fees                                  $108,864               $91,636             $312,333             $216,470
Amortization of mortgage servicing rights                 (58,713)              (48,831)            (161,454)            (105,737)
                                                   ----------------     ----------------     ----------------    -----------------
    Net servicing revenue                                   50,151               42,805              150,879              110,733
                                                                                                                    
Interest income                                             28,470               25,241               74,354               60,230
Interest expense                                           (27,386)             (22,321)             (73,340)             (61,203)
                                                   ----------------     ----------------     ----------------    -----------------
    Net interest revenue                                     1,084                2,920                1,014                 (973)

Net mortgage origination revenue                            20,676               16,521               59,186               43,604
Other income                                                   220                   79                1,256                  541
                                                   ----------------     ----------------     ----------------    -----------------
    Total Revenues                                          72,131               62,325              212,335              153,905
    
EXPENSES:

Salaries and employee benefits                              19,191               20,650               58,473               53,307
Occupancy and equipment                                      4,262                3,337               11,889                8,267
Servicing losses on investor-owned loans                     
   and foreclosure-related expenses                          5,171                4,957               15,680               12,953 
Other expenses                                               9,913               11,711               29,959               29,579
                                                   ----------------     ----------------     ----------------    -----------------
    Total Expenses                                          38,537               40,655              116,001              104,106
                                                                                                                    
Income before income taxes                                  33,594               21,670               96,334               49,799
Income tax expense                                          13,102                9,015               37,571               20,523
                                                   ----------------     ----------------     ----------------    -----------------
Net Income                                                 $20,492              $12,655              $58,763              $29,276
                                                   ================     ================     ================    =================
Net income per share                                         $0.46                $0.36                $1.33                $0.97 
                                                   ================     ================     ================    =================
</TABLE>

                 The accompanying notes are an integral part of
                          these financial statements.

                                       3
<PAGE>
<TABLE>

                         HOMESIDE, INC. and SUBSIDIARIES
                      CONSOLIDATED STATEMENT OF CASH FLOWS
                                   (UNAUDITED)

                             (Dollars in Thousands)

<CAPTION>
                                                                                                                   For the Period
                                                          For the Three     For the Three       For the Nine       from March 16,
                                                          Months Ended       Months Ended       Months Ended         1996 to      
                                                         November 30, 1997  November 30, 1996  November 30, 1997  November 30, 1996
                                                         -----------------  -----------------  -----------------  ----------------- 
<S>                                                      <C>                <C>                <C>                <C>   
CASH FLOWS PROVIDED BY (USED IN) OPERATING ACTIVITIES:

Net income                                               $         20,492   $         12,655   $         58,763   $         29,276
Adjustments to reconcile net income to net cash provided 
by (used in) operating activities:
  Amortization of mortgage servicing rights                        58,713             48,831            161,454            105,737
  Depreciation and amortization                                     2,829              1,870              8,231              6,259
  Servicing losses on investor-owned loans expenses                 3,682              4,957             10,247             12,953
  Deferred income tax expense                                      16,920              9,015             41,389             20,523
  Capitalized excess servicing rights                                  --             (7,133)                --            (16,373)
  Mortgage loans originated and purchased for sale             (6,564,839)        (3,527,008)       (19,087,320)        (9,081,815)
  Proceeds and principal repayments of mortgage loans               
    held for sale                                               6,609,753          3,716,620         18,907,888          8,853,510
  Change in accounts receivable                                   (71,814)           (59,129)          (105,451)           (78,235)
  Change in other assets and accounts payable and accrued             
    liabilities                                                   (21,312)           (43,316)           (28,989)           (33,624)
                                                         -----------------  -----------------  -----------------  -----------------
Net cash provided by (used in) operating activities                54,424            157,362            (33,788)          (181,789)

CASH FLOWS PROVIDED BY (USED IN) INVESTING ACTIVITIES:

Purchase of premises and equipment, net                            (4,539)              (596)            (9,754)            (3,354)
Acquisition of mortgage servicing rights                         (146,598)           (96,639)          (404,904)          (344,288)
Net purchases of risk management contracts                        148,058             (9,549)            67,145            (88,438)
Early pool buyout reimbursements (advances)                        56,689                 --           (311,717)                --
Acquisition of BancBoston Mortgage Corp., net of cash                                                                     
  acquired                                                             --                 --                 --           (133,392)
Acquisition of Barnett Mortgage Co., net of cash acquired              --                 --                 --           (106,244)
                                                         -----------------  -----------------  -----------------  -----------------
Net cash provided by (used in) investing activities                53,610           (106,784)          (659,230)          (675,716)

CASH FLOWS (USED IN) PROVIDED BY FINANCING ACTIVITIES:

Net borrowings from (repayments to) banks                        (135,680)           (77,419)           (85,854)           526,480
Issuance of notes payable                                          45,000                 --            750,000            200,000
Payment of debt issue costs                                          (641)                31            (6,772)            (20,290)
Repayment of long term debt                                          (154)              (148)             (457)               (417)
Proceeds from issuance of common stock                                 --                150                 --            152,915
Issuance of bridge financing                                           --                 --                 --             90,000
Repayment of bridge financing                                          --                 --                 --            (90,000)
                                                         -----------------  -----------------  -----------------  -----------------
Net cash (used in) provided by financing activities               (91,475)           (77,386)           656,917            858,688

Net increase (decrease) in cash and cash equivalents               16,559            (26,808)           (36,101)             1,183
Cash and cash equivalents at beginning of period                       31             27,991             52,691                 --
                                                         -----------------  -----------------  -----------------  -----------------
Cash and cash equivalents at end of period               $         16,590   $          1,183   $         16,590   $          1,183
                                                         =================  =================  =================  =================
</TABLE>
                 The accompanying notes are an integral part of
                          these financial statements.


                                       4
<PAGE>



                         HOMESIDE, INC. and SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)

1.  BASIS OF PRESENTATION

     The accompanying  consolidated  financial  statements have been prepared in
accordance with generally accepted  accounting  principles for interim financial
information and with the  instructions to Form 10-Q and Rule 10-01 of Regulation
S-X.  Accordingly,  they do not include  all of the  information  and  footnotes
required by generally  accepted  accounting  principles  for complete  financial
statements. In the opinion of management,  all adjustments (consisting of normal
recurring  adjustments)  considered  necessary for a fair presentation have been
included.  Operating  results for the three and nine months  ended  November 30,
1997 are not necessarily  indicative of the results that may be expected for the
fiscal year ending  February 28,  1998.  For further  information,  refer to the
consolidated  financial  statements and footnotes thereto included in the annual
report which is  incorporated  by reference in the Form 10-K for the fiscal year
ended February 28, 1997 of HomeSide, Inc. ("HomeSide" or the "Company").

      HomeSide,  through its wholly-owned operating subsidiary HomeSide Lending,
Inc., is one of the largest full service residential  mortgage banking companies
in the United  States,  formed through the  acquisition of the mortgage  banking
operations of  BankBoston,  N.A.,  formerly  known as The First National Bank of
Boston ("BankBoston"), and Barnett Banks, Inc. ("Barnett").

2.  MORTGAGE SERVICING RIGHTS

The rollforward of mortgage servicing rights is as follows (in thousands):

Balance, February 28, 1997                             $1,614,307
Additions                                                 404,904
Deferred hedge results                                  (108,951)
Amortization                                            (161,454)
                                                   ---------------
Balance, November 30, 1997                             $1,748,806
                                                   ===============

3.  NOTES PAYABLE

    HomeSide  borrows funds on a demand basis from an  independent  syndicate of
banks under a $2.5 billion credit  facility  which,  at the request of HomeSide,
may be increased to $3.0  billion.  The line of credit is used to provide  funds
for HomeSide's business of originating,  acquiring and servicing mortgage loans.
The line of credit includes both a warehouse credit  facility,  which is limited
to 98% of the fair  value of  eligible  mortgage  loans  held  for  sale,  and a
servicing-related  facility,  which is capped at $950.0 million. On February 14,
2000, the line of credit will terminate. The credit agreement contains covenants
that impose limitations and restrictions on HomeSide,  including the maintenance
of certain net worth and ratio  requirements.  Under certain  circumstances  set
forth  in  the  credit   agreement,   borrowings   under  the  agreement  become
collateralized  by  substantially  all  of  HomeSide's  assets.  HomeSide  is in
compliance with all requirements  included in the credit agreement.  At November
30, 1997, $1.7 billion is outstanding under the credit line. Amounts outstanding
at November 30, 1997 under the bank line of credit are  comprised of a warehouse
credit  facility of $962.6 million and a  servicing-related  credit  facility of
$770.0 million. The amount of the unused bank line of credit was $0.8 billion as
of November 30, 1997.

    Borrowings  under the bank line of credit bear  interest at rates per annum,
based on, at  HomeSide's  option (A) the  highest of (i) the lead  bank's  prime
rate,  (ii) the secondary  market rate of certificates of deposit plus 100 basis
points and (iii) the  federal  funds rate in effect from time to time plus 0.5%,
or (B) various  rates based on federal fund rates . At November  30,  1997,  the
weighted  average  interest rate on the amounts  borrowed  under the bank credit
facility was 6.05%.  The weighted  average  interest  rates during the three and
nine month periods ended November 30, 1997 were 6.05% and 6.03%, respectively.

4.  LONG-TERM DEBT

     On May 14,  1996,  HomeSide  issued  $200.0  million  of 11.25%  notes (the
"Parent Notes")  maturing on May 15, 2003, and paying  interest  semiannually in
arrears on May 15 and November 15 of each year, commencing on November 15, 1996.
The Parent Notes are redeemable at the option of HomeSide,  in whole or in part,
at any time on or after May 15, 2001, at certain fixed  redemption  prices.  The
indenture contains covenants that impose limitations and restrictions, including
the maintenance of certain net worth and ratio  requirements.  In addition,  the
Parent  Notes are  secured by a second  priority  pledge of the common  stock of
HomeSide  Lending,  Inc.  HomeSide is in compliance with all net worth and ratio
requirements  included in the indenture  relating to the Parent Notes.  HomeSide
used a portion of the  proceeds  from its  February  5, 1997  offering of common
stock to pre-pay $70.0 million of the Parent Notes at a premium of $7.9 million.
The amount outstanding at November 30, 1997 is $130.0 million.

                                       5
<PAGE>
     As of November 30, 1997,  outstanding  medium-term notes issued by HomeSide
Lending,  Inc., under a shelf  registration  statement filed with the Securities
and Exchange Commission (SEC) were as follows (in thousands):

Issue Date          Outstanding Balance   Interest Rate     Maturity Date
------------------  -------------------   -------------     -------------------
May 20, 1997          $    250,000            6.890%         May 15, 2000
June 30, 1997              200,000            6.883%         June 30, 2002
June 30, 1997               40,000            6.820%         July  2, 2001
July  1, 1997               15,000            6.860%         July  2, 2001
July 31, 1997              200,000            6.818%         August 1, 2004
September 15, 1997          45,000            6.770%         September 17, 2001
                    -------------------

Total                     $750,000

============================
     As of November  30, 1997,  $650.0  million of the  outstanding  medium-term
notes  had been  effectively  converted  by  interest  rate swap  agreements  to
floating-rate  notes. The weighted  average  borrowing rates on medium-term note
borrowings  issued for the three and nine month periods ended November 30, 1997,
including  the effect of the  interest  rate swap  agreements,  were 6.77%,  and
6.20%,  respectively.  Net proceeds from the issuances  were  primarily  used to
reduce the amounts  outstanding under the bank credit agreement.  As of November
30, 1997,  $250.0  million was  available for future  issuances  under the Shelf
Registration Statement.

5.  EARLY POOL BUYOUT ADVANCES

     During fiscal 1998,  HomeSide  initiated an early pool buyout program which
involves the  purchase of  delinquent  government  loans from pools early in the
foreclosure  process,  thereby reducing the  unreimbursed  interest expense that
HomeSide incurs.  The funding of the purchases of these delinquent loans for the
early pool buyout program is recorded as interest  expense,  and interest income
earned from the guarantor  agency during the  foreclosure  process is accrued to
match the funding  expense  incurred.  Scheduled  interest  payments made to the
investor  before the loans were  purchased  from the pool are  recorded as early
pool buyout  advances with a reserve for advances  which will not  ultimately be
collected.

6.  COMMITMENTS AND CONTINGENCIES

   On October 25, 1997,  HomeSide and National  Australia Bank ("the  National")
entered  into an  Agreement  and Plan of Merger  under which the  National  will
acquire HomeSide.  The National will pay $27.825 in cash for each HomeSide share
or a total of US$1.2 billion  (AUD$1.7  billion).  The transaction is subject to
regulatory  approvals  and  approval  by  HomeSide's  stockholders  at a special
stockholders'   meeting  scheduled  for  January  16,  1998.   HomeSide's  major
stockholders,  who collectively own approximately 76% of HomeSide's  outstanding
common stock, have agreed to vote in favor of the approval of the transaction at
the stockholders'  meeting.  The proposed transaction is expected to close early
in the first quarter of calendar 1998.


ITEM 2.  Management's Discussion and Analysis of Financial  Condition and 
Results of Operations

General

      HomeSide,  Inc., through its wholly-owned  operating  subsidiary  HomeSide
Lending,  Inc., is one of the largest full service residential  mortgage banking
companies in the United States,  formed through the  acquisition of the mortgage
banking  operations of  BankBoston,  N.A.,  formerly known as The First National
Bank of Boston ("BankBoston"),  and Barnett Banks, Inc. ("Barnett").  HomeSide's
strategy emphasizes  variable cost mortgage  origination and low cost servicing.
Headquartered  in  Jacksonville,  Florida,  HomeSide  ranks  as the 4th  largest
originator and the 7th largest servicer in the United States for the nine months
ended September 30, 1997 based on data published by Inside Mortgage Finance.

       HomeSide  plans  to  build  its  core  operations  through  (i)  improved
economies  of  scale in  servicing  costs;  (ii)  increased  productivity  using
proprietary  technology;  and  (iii)  expanded  and  diversified  variable  cost
origination  channels.  In addition,  HomeSide intends to pursue additional loan
portfolio  acquisitions and strategic  origination  relationships similar to the
existing BankBoston and Barnett arrangements.

                                       6
<PAGE>
  Forward-Looking Statements

      The  Private  Securities  Litigation  Reform Act of 1995  provides a "safe
harbor" for certain  forward-looking  statements.  This Quarterly Report on Form
10-Q contains  forward-looking  statements  which reflect the Company's  current
views  with  respect  to  future   events  and  financial   performance.   These
forward-looking  statements  are  subject  to certain  risks and  uncertainties,
including  those  identified  below,  which could cause actual results to differ
materially from historical  results or those  anticipated.  The words "believe,"
"expect,"   "anticipate,"  "intend,"  "estimate"  and  other  expressions  which
indicated future events and trends identify  forward-looking  statements,  which
speak only as of their dates.  The Company  undertakes no obligation to publicly
update or  revise  any  forward-looking  statements  whether  as a result of new
information,  future  events or  otherwise.  The  following  factors could cause
actual  results  to  differ   materially  from   historical   results  or  those
anticipated:  (1) the Company's  ability to grow which depends on its ability to
obtain additional  financing in the future for originating loans,  investment in
servicing  rights,  working capital,  capital  expenditure and general corporate
purposes,   (2)  economic   downturns  may   negatively   affect  the  Company's
profitability  as the  frequency  of loan  default  tends  to  increase  in such
environments  and (3)  changes in  interest  rates may affect the volume of loan
originations and acquisitions,  the interest rate spread on loans held for sale,
the  amount of gain or loss on the sale of loans and the value of the  Company's
servicing  portfolio.  These risks and  uncertainties are more fully detailed in
the Company's filings with the Securities and Exchange Commission ("SEC").

   Loan Production Activities

      As a  multi-channel  loan  production  lender,  HomeSide  has  one  of the
industry's largest correspondent lending production  operations,  a full-service
brokered  loan  program and a national  production  center for  consumer  direct
mortgage  lending.  By  focusing on  production  channels  with a variable  cost
structure,  HomeSide  eliminates  the fixed costs  associated  with  traditional
mortgage  branch  offices.  Without  the burden of high  fixed cost  origination
overhead,  HomeSide is well  positioned  to weather a variety of  interest  rate
environments.

      The  following   information  regarding  loan  production  activities  for
HomeSide is  presented to aid in  understanding  the results of  operations  and
financial  condition of HomeSide  for the three months ended  November 30, 1997,
the three months ended November 30, 1996, and for the nine months ended November
30, 1997 and the period from March 16, 1996 to November 30, 1996 (in millions):
<TABLE>
<CAPTION>

                                                                                                  For the Period                  
                                          For the Three      For the Three      For the Nine      from March 16, 
                                          Months Ended       Months Ended       Months Ended          1996 to 
                                        November 30, 1997  November 30, 1996  November 30, 1997  November 30, 1996  
                                        -----------------  -----------------  -----------------  -----------------                 
<S>                                     <C>                <C>                <C>                <C>
Correspondent                           $          3,310   $          3,249   $         10,334   $          8,092
Co-issue                                           1,745              1,985              4,422              5,612
Broker                                               319                168              1,015                543
                                        -----------------  -----------------  -----------------  -----------------
Total wholesale                                    5,374              5,402             15,771             14,247
Direct                                               106                139                250                566
                                        -----------------  -----------------  -----------------  -----------------
Total production                                   5,480              5,541             16,021             14,813
Bulk acquisitions                                  1,085                 --              3,066              4,073
                                        =================  =================  =================  =================
Total production and acquisitions       $          6,565   $          5,541   $         19,087   $         18,886
                                        =================  =================  =================  =================
</TABLE>

      Total loan production,  excluding bulk acquisitions,  was $5.5 billion for
the three months ended  November 30, 1997,  approximately  equal to  production,
excluding bulk acquisitions,  for the three months ended November 30, 1996. Loan
production  for  the  nine  months  ended  November  30,  1997,  excluding  bulk
acquisitions, increased $1.2 billion to $16.0 billion from $14.8 billion for the
period from March 16, 1996 to November 30, 1996.  The increase was primarily due
to growth in HomeSide's  correspondent  lending channel,  which increased 27% to
$10.3 billion for the nine months ended  November 30, 1997 from $8.1 billion for
the period from March 16, 1996 to November  30, 1996.  In addition,  the May 31,
1996  acquisition of Barnett  Mortgage  Company,  a  wholly-owned  subsidiary of
Barnett ("BMC") and the preferred partnership agreement with Barnett under which
all loans  originated by Barnett are sold to HomeSide  contributed to the growth
in production  for the nine month period ended November 30, 1997 compared to the
period  from  March 16,  1996 to  November  30,  1996.  HomeSide  also made bulk
servicing  acquisitions  of $1.1 billion  during the three months ended November
30, 1997, with no bulk servicing  acquisitions occurring during the three months
ended November 30, 1996.

      HomeSide  continues  to  examine  a number of ways to  diversify  and grow
revenue sources from its existing and new customer base.  HomeSide has announced
an alliance  with a subprime  lender which allows  HomeSide to offer  additional
mortgage-related  products to the production network.  The subprime lending unit
is scheduled to begin operations in January 1998.

                                       7
<PAGE>
   Servicing Portfolio

      Management  believes that HomeSide is one of the most  efficient  mortgage
servicers in the industry based on its servicing cost per loan and the number of
loans  serviced per employee.  The servicing  operation  makes  extensive use of
state-of-the-art technology, process re-engineering and expense management. With
a portfolio  size of over $98 billion,  HomeSide  services the loans of over one
million  homeowners from across the United States and is committed to protecting
the value of this important asset by a sophisticated  risk management  strategy.
HomeSide  anticipates  its low cost of servicing loans will continue to maximize
the bottom-line impact of its growing servicing  portfolio.  HomeSide's focus on
efficient  and low cost  processes  is  pursued  through  the  selective  use of
automation as well as the strategic  outsourcing of selected servicing functions
and effective control of delinquencies and foreclosures.

      The  following  information  on the dollar  amounts of loans  serviced  is
presented  to aid in  understanding  the  results of  operations  and  financial
condition of HomeSide for the three  months ended  November 30, 1997,  the three
months ended  November 30, 1996, and for the nine months ended November 30, 1997
and the period from March 16, 1996 to November 30, 1996 (in millions):
<TABLE>
<CAPTION>

                                                                                                  For the Period                  
                                          For the Three      For the Three      For the Nine      from March 16,
                                          Months Ended       Months Ended       Months Ended          1996 to   
                                        November 30, 1997  November 30, 1996  November 30, 1997  November 30, 1996   
                                        -----------------  -----------------  -----------------  -----------------       
<S>                                     <C>                <C>                <C>                <C> 
Balance at beginning of period          $         96,554   $         85,835   $         90,192   $         42,907
Acquisition of BMC                                    --                 --                 --             33,082
Other additions                                    6,565              5,244             19,087             19,188
                                        -----------------  -----------------    ---------------  -----------------
     Total additions                               6,565              5,244             19,087             52,270
                                        -----------------  -----------------  -----------------  -----------------
Scheduled amortization                               535                517              1,600              1,246
Prepayments                                        3,159              1,529              7,853              4,552
Foreclosures                                         220                106                532                373
Sales of servicing                                   337                221                426                300
                                        -----------------  ----------------   -----------------  -----------------
     Total reductions                              4,251              2,373             10,411              6,471
                                        =================  =================  =================  =================
Balance at end of period                $         98,868   $         88,706   $         98,868   $         88,706
                                        =================  =================  =================  =================
</TABLE>

      The number of loans serviced at November 30, 1997 was 1,179,563,  compared
to 1,085,000 at November 30, 1996.  HomeSide's strategy is to build its mortgage
servicing   portfolio  by   concentrating  on  variable  cost  loan  origination
strategies,  and as a result, benefit from improved economies of scale. A key to
HomeSide's future growth is the proprietary  servicing  software  purchased from
Barnett.  This  system  will  allow  HomeSide  to double its  current  servicing
capacity on a single  system.  During the three months ended  November 30, 1997,
HomeSide  transferred  approximately  one-third  of the  loans  serviced  to its
proprietary servicing software.  After the transfer,  over half of the servicing
portfolio is serviced on the proprietary  system.  The transfer of the remaining
portfolio is expected to occur by the end of 1998.


Results of Operations

Three months ended November 30, 1997 compared to three months ended November 30,
1996

   Summary

      HomeSide's net income increased approximately 61% to $20.5 million for the
three  months ended  November  30, 1997 from $12.7  million for the three months
ended November 30, 1996.  Total revenues for the three months ended November 30,
1997  increased  16% to $72.1  million  from $62.3  million for the three months
ended  November 30, 1996. The increases in net income and revenues for the three
months ended  November 30, 1997 compared to the three months ended  November 30,
1996 were primarily  attributable  to increases of $7.3 million in net servicing
revenue  and $4.2  million in net  mortgage  origination  revenue,  while  total
expenses  decreased by $2.1 million.  The increase in net servicing  revenue was
mainly a result of a $10.2 billion increase in the servicing  portfolio to $98.9
billion at  November  30,  1997 from $88.7  billion at November  30,  1996.  Net
mortgage  origination  revenue  increased  due to gains in  secondary  marketing
activities.

    Net Servicing Revenue

      Net  servicing  revenue  was  $50.2  million  for the three  months  ended
November 30, 1997 compared to $42.8 million for the three months ended  November
30,  1996.  Net  servicing  revenue is  comprised  of mortgage  servicing  fees,
ancillary servicing revenue, and amortization of mortgage servicing rights.

                                       8
<PAGE>
      Mortgage  servicing  fees  increased  19% to $108.9  million for the three
months  ended  November  30, 1997 from $91.6  million for the three months ended
November 30, 1996,  primarily as a result of growth of the  servicing  portfolio
through loan production channels and bulk servicing acquisitions.  The servicing
portfolio  increased  to $98.9  billion at November  30, 1997  compared to $88.7
billion at November 30,  1996,  an 11%  increase.  HomeSide's  weighted  average
interest  rate of the mortgage  loans in the  servicing  portfolio  was 7.87% at
November 30, 1997 and 7.91% at November 30, 1996. The weighted average servicing
fee,  including  ancillary  income,  for the servicing  portfolio was 0.445% and
0.419% for the three months  ended  November 30, 1997 and the three months ended
November 30, 1996, respectively.  The increase in the weighted average servicing
fee from the three months  November 30, 1997 to the three months ended  November
30, 1996 was due to growth of ancillary revenues,  including late fees and other
mortgage-related  products,  and higher proportions of government loans serviced
which typically have a higher servicing fee.  Amortization  expense increased to
$58.7  million for the three months ended  November 30, 1997 from $48.8  million
for the three  months ended  November  30, 1996 as a result of a higher  average
balance  of  mortgage  servicing  rights and a  decrease  of 57 basis  points in
average mortgage interest rates from the three months ended November 30, 1996 to
the three  months  ended  November  30,  1997.  Amortization  charges are highly
dependent  upon the level of  prepayments  during  the  period  and  changes  in
prepayment expectations, which are significantly influenced by the direction and
level of long-term  interest  rate  movements.  A decrease in mortgage  interest
rates  results  in an  increase  in  prepayment  estimates  used in  calculating
periodic amortization  expense.  Because mortgage servicing rights are amortized
over the  expected  period of service  fee  revenues,  an  increase  in mortgage
prepayment  activity  typically  results  in a  shorter  estimated  life  of the
mortgage servicing assets and, accordingly, higher amortization expense.

   Net Interest Revenue

      Net  interest  revenue  is  driven  by the level of  interest  rates,  the
direction in which rates are moving and the spread  between  short and long-term
interest rates.  These factors  influence the size of the  residential  mortgage
origination  market,  HomeSide's loan production  volumes and the interest rates
HomeSide earns on loans and pays to its lenders.

      Loan refinancing levels are the largest contributor to changes in the size
of the mortgage  origination market. To reduce the cost of their home mortgages,
borrowers  tend to refinance  their loans during  periods of declining  interest
rates,  increasing  the  size of the  origination  market  and  HomeSide's  loan
production  volumes.  Higher loan  production  volumes  result in higher average
balances  of loans  held for sale and  consequently  higher  levels of  interest
income from interest earned on such loans prior to their sale. This higher level
of interest  income due to increased  volumes is  partially  offset by the lower
rates earned on the loans.

      Overall  borrowing  costs also fluctuate  with changes in interest  rates.
Currently, the interest expense HomeSide pays to finance mortgage loans held for
sale and other net assets is generally  calculated  with reference to short-term
interest rates. In addition,  because mortgage loans held for sale earn interest
based on longer term interest rates,  the level of net interest  revenue is also
influenced by the spread between long-term and short-term interest rates.

      Net interest revenue  decreased $1.8 million to $1.1 million for the three
months  ended  November  30, 1997 from $2.9  million for the three  months ended
November 30, 1996,  primarily  due to a decrease in the spread  between  average
mortgage  interest rates and short-term  borrowing  rates on mortgage loans held
for sale and an increase in interest expense,caused by increases in paid in full
scheduled  interest  payments  and a higher  funding of the  mortgage  servicing
assets.  During the three months ended  November  30, 1997,  HomeSide's  primary
operating  subsidiary,  HomeSide Lending, Inc. issued $45 million of medium-term
notes to the public  market at an average cost of 6.77% as of November 30, 1997.
The proceeds  were used to pay down existing  bank debt,  increasing  HomeSide's
borrowing  capacity.  An immediate benefit of this increased  borrowing capacity
was the investment in HomeSide's  early pool buyout program,  which involves the
purchase of  delinquent  government  loans from pools  early in the  foreclosure
process,  thereby  reducing the  unreimbursed  interest  expense  that  HomeSide
incurs.

   Net Mortgage Origination Revenue

      Net  mortgage  origination  revenue  is  comprised  of fees  earned on the
origination of mortgage loans,  gains and losses on the sale of loans, gains and
losses resulting from hedging of secondary marketing activities and fees charged
to review loan documents for purchased loan production.

      Net mortgage  origination  revenue was $20.7  million for the three months
ended  November  30, 1997  compared to $16.5  million for the three months ended
November  30,  1996, a 25%  increase.  The increase in net mortgage  origination
revenue during the three months ended November 30, 1997 as compared to the three
months  ended  November  30, 1996  reflects an increase in gains from  secondary
marketing activities.

                                       9
<PAGE>
   Salaries and Employee Benefits

      Salaries and  employee  benefits  expense was $19.2  million for the three
months ended  November 30, 1997  compared to $20.7  million for the three months
ended  November  30,  1996 due to the  continuing  integration  of BMC  mortgage
servicing  systems acquired on May 31, 1996 and decreases in commission  expense
from the  elimination  of the  retail  branch  network.  The  average  number of
full-time  equivalent  employees  increased  to 1,805 for the three months ended
November 30, 1997 from 1,708 for the three months ended November 30, 1996.

   Occupancy and Equipment Expense

      Occupancy and equipment expense primarily includes rental expense, repairs
and maintenance  costs,  certain computer  software expenses and depreciation of
HomeSide's premises and equipment. Occupancy and equipment expense for the three
months ended November 30, 1997 was $4.3 million compared to $3.3 million for the
three months ended  November 30, 1996. The increase in expense was mainly due to
office  renovation,  personal  property  taxes,  and the increase in information
systems costs required to handle the growing mortgage servicing portfolio.

   Servicing Losses on Investor-Owned Loans and Foreclosure-related Expenses

      Servicing  losses on  investor-owned  loans represent  anticipated  losses
primarily  attributable  to  servicing  FHA and VA loans  for  investors.  These
amounts   include   actual   losses   for  the  final   disposition   of  loans,
non-recoverable  foreclosure costs,  accrued interest for which payment has been
curtailed and estimates for potential losses based on HomeSide's experience as a
servicer of government loans.

      During the three months ended November 30, 1997,  the servicing  losses on
investor-owned  loans and  foreclosure-related  expenses  totaled  $5.2  million
compared to $5.0  million for the three months  ended  November  30,  1996.  The
increase  was  largely  attributable  to the growth of the  servicing  portfolio
resulting  from loan  production  and increased  foreclosure  losses,  which are
likely to continue at this level as the servicing portfolio ages.

      Included  in the balance of accounts  payable and accrued  liabilities  at
November 30, 1997 is a reserve for estimated  servicing losses on investor-owned
loans of $21.7 million.  The reserve has been  established for potential  losses
related to the  mortgage  servicing  portfolio.  Increases  to the  reserve  are
charged to earnings as servicing losses on investor-owned  loans. The reserve is
decreased  for  actual  losses  incurred  related  to  the  mortgage   servicing
portfolio.  HomeSide's historical loss experience on VA loans generally has been
consistent with industry  experience.  Management  believes that HomeSide has an
adequate  level of reserve  based on servicing  volume,  portfolio  composition,
credit quality and historical loss rates, as well as estimated future losses.

The  following   table  sets  forth   HomeSide's   delinquency  and  foreclosure
experience:

                        Servicing Portfolio Delinquencies
                             (percent by loan count)

                                       November 30, 1997     November 30, 1996
                                      --------------------  -------------------
Servicing Portfolio Delinquencies,
  excluding bankruptcies
  (at end of period)
          30 days                            4.12%                3.50%
          60 days                            0.82%                0.68%
          90+ days                           0.69%                0.58%
                                       ===================  ===================
               Total past due                5.63%                4.76%
                                       ===================  ===================

          Foreclosures pending               0.73%                0.64%
                                       ===================  ===================


   Other Expenses

Other expenses  consist mainly of  professional  fees,  communications  expense,
advertising  and public  relations,  data  processing  expenses and certain loan
origination expenses.  The level of other expenses fluctuates in part based upon
the  level of  HomeSide's  mortgage  servicing  portfolio  and  loan  production
volumes.

      Other  expenses  during the three months ended November 30, 1997 were $9.9
million  compared to $11.7 million for the three months ended November 30, 1996,
primarily  due to the  continuing  integration  of the  BMC  mortgage  servicing
operations acquired on May 31, 1996.

                                       10
<PAGE>
   Income Tax Expense

      HomeSide's income tax expense was $13.1 million for the three months ended
November 30, 1997 and $9.0 million for the three months ended November 30, 1996.
The effective  income tax rates for the three months ended November 30, 1997 and
the  three  months  ended  November  30,  1996 were  approximately  39% and 42%,
respectively.


Results of Operations

Nine months ended  November  30, 1997  compared to period from March 16, 1996 to
November 30, 1996

   Summary

      HomeSide's net income  increased 101% to $58.8 million for the nine months
ended November 30, 1997 from $29.3 million for the period from March 16, 1996 to
November 30, 1996.  Total  revenues for the nine months ended  November 30, 1997
increased  38% to $212.3  million from $153.9  million for the period from March
16, 1996 to November 30, 1996.  The increases in net income and revenues for the
nine months ended  November 30, 1997  compared to the period from March 16, 1996
to November 30, 1996 were primarily  attributable  to the  acquisition of BMC on
May 31, 1996 and  increases of $40.2  million in net  servicing  revenue,  $15.6
million in net mortgage  origination  revenue,  and $2.0 million in net interest
revenue.  The BMC servicing  portfolio was $33.1 billion at May 31, 1996 and its
acquisition  increased HomeSide's servicing portfolio by 75% on that date, which
was a major  factor in the  increase  in net  servicing  revenue.  In  addition,
subsequent  increases in the size of the servicing portfolio  contributed to the
increased  revenue.  The  servicing  portfolio  increased  to $98.9  billion  at
November 30, 1997 from $88.7 billion at November 30, 1996,  an 11% increase.  As
part of the BMC acquisition,  Barnett agreed to sell HomeSide the loans produced
by the loan production  networks  retained by Barnett,  which contributed to the
increase in net mortgage  origination  revenue.  Net interest revenue  increased
primarily  as a result of reduced  borrowing  costs from the bank line of credit
from  improved  credit  ratings  and the  issuance  of  medium-term  notes which
expanded borrowing capacity.

    Net Servicing Revenue

      Net  servicing  revenue  was  $150.9  million  for the nine  months  ended
November 30, 1997 compared to $110.7  million for the period from March 16, 1996
to November 30, 1996. Net servicing  revenue is comprised of mortgage  servicing
fees, ancillary servicing revenue, and amortization of mortgage servicing rights
expense.

      Mortgage  servicing  fees  increased  44% to $312.3  million  for the nine
months ended November 30, 1997 from $216.5 million for the period from March 16,
1996 to November 30,  1996,  primarily  as a result of the BMC  acquisition  and
growth of the  servicing  portfolio  through loan  production  channels and bulk
servicing  acquisitions.  The servicing  portfolio increased to $98.9 billion at
November 30, 1997  compared to $88.7  billion at November  30, 1996.  HomeSide's
weighted average interest rate of the mortgage loans in the servicing  portfolio
was 7.87% at November  30, 1997 and 7.91% at November  30,  1996.  The  weighted
average servicing fee, including  ancillary income, for the servicing  portfolio
was 0.439% and 0.432% for the nine months ended November 30, 1997 and the period
from March 16, 1996 to November  30,  1996,  respectively.  The  increase in the
weighted average  servicing fee for the nine months ended November 30, 1997 from
the  period  from  March  16,  1996 to  November  30,  1996 was due to growth of
ancillary revenues, including late fees and revenues from other mortgage-related
products,  and higher  proportions of government  loans serviced which typically
have a higher servicing fee.  Amortization  expense  increased to $161.5 million
for the nine months ended  November 30, 1997 from $105.7  million for the period
from March 16, 1996 to November 30, 1996 mainly as a result of a higher  average
balance  of  mortgage  servicing  rights and a  decrease  of 36 basis  points in
average mortgage  interest rates from the period from March 16, 1996 to November
30, 1996 to the nine months ended  November 30, 1997.  Amortization  charges are
highly dependent upon the level of prepayments  during the period and changes in
prepayment expectations, which are significantly influenced by the direction and
level of long-term  interest  rate  movements.  A decrease in mortgage  interest
rates  results  in an  increase  in  prepayment  estimates  used in  calculating
periodic amortization  expense.  Because mortgage servicing rights are amortized
over the  expected  period of service  fee  revenues,  an  increase  in mortgage
prepayment  activity  typically  results  in a  shorter  estimated  life  of the
mortgage  servicing assets and,  accordingly,  higher  amortization  expense.  A
decrease  in  mortgage  interest  rates  results in an  increase  in  prepayment
estimates used in calculating periodic  amortization  expense.  Because mortgage
servicing rights are amortized over the expected period of service fee revenues,
a  reduction  in  mortgage  prepayment  activity  typically  results in a longer
estimated  life  of  the  mortgage  servicing  assets  and,  accordingly,  lower
amortization  expense.  Amortization charges are highly dependent upon the level
of prepayments during the period and changes in prepayment  expectations,  which
are  significantly  influenced  by the  direction  and level of  long-term  rate
movements.

                                       11
<PAGE>
 Net Interest Revenue

      Net  interest  revenue  is  driven  by the level of  interest  rates,  the
direction in which rates are moving and the spread  between  short and long-term
interest rates.  These factors  influence the size of the  residential  mortgage
origination  market,  HomeSide's loan production  volumes and the interest rates
HomeSide earns on loans and pays to its lenders.

      Loan refinancing levels are the largest contributor to changes in the size
of the mortgage  origination market. To reduce the cost of their home mortgages,
borrowers  tend to refinance  their loans during  periods of declining  interest
rates,  increasing  the  size of the  origination  market  and  HomeSide's  loan
production  volumes.  Higher loan  production  volumes  result in higher average
balances  of loans  held for sale and  consequently  higher  levels of  interest
income from interest earned on such loans prior to their sale. This higher level
of interest  income due to increased  volumes is  partially  offset by the lower
rates earned on the loans.

      Overall  borrowing  costs also fluctuate  with changes in interest  rates.
Currently, the interest expense HomeSide pays to finance mortgage loans held for
sale and other net assets is generally  calculated  with reference to short-term
interest rates. In addition,  because mortgage loans held for sale earn interest
based on longer term interest rates,  the level of net interest  revenue is also
influenced by the spread between long-term and short-term interest rates.

      Net  interest  revenue  increased  $2.0  million for the nine months ended
November 30, 1997 to $1.0 from $(1.0) million for the period from March 16, 1996
to November 30, 1996,  primarily due to improved  funding rates obtained through
improved credit ratings,  the issue of medium-term  notes and the adoption of an
early pool buyout  program.  During the nine months  ended  November  30,  1997,
HomeSide's  primary operating  subsidiary,  HomeSide  Lending,  Inc. issued $750
million of medium-term notes to the public market at an average cost of 6.20% as
of November 30, 1997.  The proceeds  were used to pay down  existing  bank debt,
increasing HomeSide's borrowing capacity. An immediate benefit of this increased
borrowing  capacity was the  initiation of an early pool buyout  program,  which
involves the  purchase of  delinquent  government  loans from pools early in the
foreclosure  process,  thereby reducing the  unreimbursed  interest expense that
HomeSide incurs.

   Net Mortgage Origination Revenue

      Net  mortgage  origination  revenue  is  comprised  of fees  earned on the
origination of mortgage loans,  gains and losses on the sale of loans, gains and
losses resulting from hedging of secondary marketing activities and fees charged
to review loan documents for purchased loan production.

      Net  mortgage  origination  revenue was $59.2  million for the nine months
ended  November 30, 1997 compared to $43.6 million for the period from March 16,
1996 to  November  30,  1996,  a 36%  increase.  The  increase  in net  mortgage
origination  revenue  during the nine months ended November 30, 1997 as compared
to the  period  from  March  16,  1996 to  November  30,  1996 is due in part to
increased  production  resulting  from the preferred  seller  relationship  with
Barnett  established  as part of the BMC  acquisition.  Barnett  agreed  to sell
HomeSide loans produced by the loan production networks retained by Barnett. The
increase also reflects an increase in loan production  volumes primarily through
HomeSide's correspondent lending channel and an increase in gains from secondary
marketing activities.

   Salaries and Employee Benefits

      Salaries  and  employee  benefits  expense was $58.5  million for the nine
months  ended  November 30, 1997  compared to $53.3  million for the period from
March 16, 1996 to  November  30,  1996 due to the  purchase of the BMC  mortgage
servicing  operations  acquired on May 31, 1996. The average number of full-time
equivalent  employees  increased to 1,805 for the nine months ended November 30,
1997 from 1,708 for the period from March 16, 1996 to November 30, 1996.

   Occupancy and Equipment Expense

      Occupancy and equipment expense primarily includes rental expense, repairs
and maintenance  costs,  certain computer  software expenses and depreciation of
HomeSide's premises and equipment.  Occupancy and equipment expense for the nine
months ended  November 30, 1997 was $11.9  million  compared to $8.3 million for
the period from March 16, 1996 to November 30, 1996. The increase in expense was
mainly due to the purchase of the BMC mortgage servicing operations acquired  on
May 31, 1996.




   Servicing Losses on Investor-Owned Loans and Foreclosure-related Expenses

      Servicing  losses on  investor-owned  loans represent  anticipated  losses
primarily  attributable  to  servicing  FHA and VA loans  for  investors.  These
amounts  include actual losses for final  disposition of loans,  non-recoverable
foreclosure  costs,  accrued  interest  for which  payment  has been  denied and
estimates for potential  losses based on HomeSide's  experience as a servicer of
government loans.


                                       12
<PAGE>
      During the nine months ended  November 30, 1997,  the servicing  losses on
investor-owned  loans and  foreclosure-related  expenses  totaled  $15.7 million
compared to $13.0  million  for the period  from March 16, 1996 to November  30,
1996.  The  increase  was largely  attributable  to the growth of the  servicing
portfolio resulting from loan production and increased foreclosure losses, which
are likely to continue at this level as the servicing portfolio ages.

      Included  in the balance of accounts  payable and accrued  liabilities  at
November 30, 1997 is a reserve for estimated  servicing losses on investor-owned
loans of $21.7 million.  The reserve has been  established for potential  losses
related to the  mortgage  servicing  portfolio.  Increases  to the  reserve  are
charged to earnings as servicing losses on investor-owned  loans. The reserve is
decreased  for  actual  losses  incurred  related  to  the  mortgage   servicing
portfolio.  HomeSide's historical loss experience on VA loans generally has been
consistent with industry  experience.  Management  believes that HomeSide has an
adequate  level of reserve  based on servicing  volume,  portfolio  composition,
credit quality and historical loss rates, as well as estimated future losses.

The  following   table  sets  forth   HomeSide's   delinquency  and  foreclosure
experience:

                        Servicing Portfolio Delinquencies
                             (percent by loan count)

                                         November 30,1997     November 30, 1996
                                        -------------------  -------------------
Servicing Portfolio Delinquencies,
  excluding bankruptcies
  (at end of period)
          30 days                             4.12%                3.50%
          60 days                             0.82%                0.68%
          90+ days                            0.69%                0.58%
                                        ===================  ===================
               Total past due                 5.63%                4.76%
                                        ===================  ===================

          Foreclosures pending                0.73%                0.64%
                                        ===================  ===================

   Other Expenses

      Other  expenses  consist  mainly  of  professional  fees,   communications
expense,  advertising and public relations, data processing expenses and certain
loan origination expenses.  The level of other expenses fluctuates in part based
upon the level of HomeSide's  mortgage  servicing  portfolio and loan production
volumes.

      Other expenses during the nine months ended November 30, 1997 were $30.0
million, approximately equal to other expenses for the period from March 16, 
1996 to November 30, 1996.

 Income Tax Expense

      HomeSide's  income tax expense was $37.6 million for the nine months ended
November  30,  1997 and $20.5  million  for the period  from  March 16,  1996 to
November 30, 1996. The increases were  attributable  to increases in net income.
The effective  income tax rates for the nine months ended  November 30, 1997 and
the period from March 16, 1996 to November 30, 1996 were  approximately  39% and
41%, respectively.


Risk Management Activities

      HomeSide has a risk  management  program  designed to protect the economic
value  of its  mortgage  servicing  portfolio  from  declines  in  value  due to
increases in estimated loan prepayment speeds, which are primarily influenced by
declines in interest rates. When loans prepay faster than anticipated,  the cash
flow HomeSide expects to receive from servicing such loans is reduced. The value
of mortgage  servicing rights is based on the present value of the cash flows to
be received over the life of the loans and therefore, the value of the servicing
portfolio declines as prepayments increase.

      Since its formation,  HomeSide has utilized options on U.S.  Treasury bond
futures and U.S.  Treasury bond futures to protect a significant  portion of the
market value of its mortgage servicing  portfolio from a decline in value. These
risk management instruments have characteristics such that they tend to increase
in  value  as  interest  rates  decline.   Conversely,   these  risk  management
instruments  tend to  decline  in value as  interest  rates  rise.  Accordingly,
changes in value of these hedge  instruments  will tend to move  inversely  with
changes in value of HomeSide's mortgage servicing rights.

                                       13
<PAGE>
      These risk management instruments are designated as hedges on the purchase
date and such  designation  is at a level at least as  specific  as the level at
which  mortgage  servicing  rights  are  evaluated  for  impairment.   The  risk
management  instruments  are  marked-to-market  with  changes  in  market  value
deferred  as an  adjustment  to  the  carrying  value  of the  related  mortgage
servicing  right asset being  hedged.  Changes in market value that are deferred
are amortized  and  evaluated  for  impairment in the same manner as the related
mortgage  servicing rights. The effectiveness of HomeSide's hedging activity can
be  measured  by the  correlation  between  changes  in the  value  of the  risk
management instruments and changes in the value of HomeSide's mortgage servicing
rights.  This  correlation is assessed on a quarterly  basis to ensure that high
correlation is maintained over the term of the hedging  program.  During each of
the periods  presented,  HomeSide has  experienced a high measure of correlation
between  changes  in the  value  of  mortgage  servicing  rights  and  the  risk
management  instruments.  However,  in periods  of rising  interest  rates,  the
increase in value of mortgage  servicing rights may outpace the decline in value
of the options  included in the hedge  position,  because the loss on options is
limited to the premium paid.

      The hedge  strategy  continued  to  perform as  expected  during the three
months  ended  November  30, 1997 and proved  especially  effective as long-term
rates  reached  their lowest level since  November of 1996.  For the three month
periods ended November 30, 1997 and 1996, HomeSide experienced net gains on risk
management contracts of $161.5 million and $133.3 million, respectively. For the
nine  months  ended  November  30,  1997 and the period  from March 16,  1996 to
November 30, 1996,  net gains on risk  management  contracts were $108.9 million
and $60.2 million, respectively. The decrease in the estimated fair value of the
mortgage  servicing  rights  approximated  the  net  gains  on  risk  management
contracts for these periods.  HomeSide's future cash needs as they relate to its
hedging program will be influenced by such factors as long-term  interest rates,
loan production levels and growth in the mortgage servicing portfolio.  The fair
value of open risk  management  option  contracts at November 30, 1997 was $87.0
million,  and the fair value of open futures  contracts was $3.7 million,  which
was equal to their carrying amount because the risk  management  instruments are
marked-to-market at each reporting date.


Liquidity and Capital Resources

      The  Company's  principal  financing  needs  are  the  financing  of  loan
origination  activities  and the investment in servicing  rights.  To meet these
needs, the Company currently  utilizes funding from an independent  syndicate of
banks,  including a warehouse credit facility and a servicing-related  facility,
medium-term  notes, and cash flow from operations.  In the past, the Company has
also utilized short-term credit facilities and public offerings of common stock.
HomeSide  continues to  investigate  and pursue  alternative  and  supplementary
methods to finance its growing operations through the public and private capital
markets.  These may include methods  designed to expand the Company's  financial
capacity and reduce its cost of capital. In addition, to facilitate the sale and
distribution of certain mortgage products, HomeSide Mortgage Securities, Inc., a
wholly owned  subsidiary of HomeSide  Lending,  Inc., may issue mortgage  backed
securities.

   Operations

      Net cash used in  operations  was $33.8  million for the nine months ended
November 30, 1997.  Proceeds from the issuance of medium-term notes were used to
fund loan  originations.  These uses of cash were offset by cash  provided  from
servicing fee income, loan sales and principal repayments.  Cash flows from loan
originations  are dependent  upon current  economic  conditions and the level of
long-term interest rates.  Higher cash demands to meet increased loan production
levels are primarily met through borrowings and loan sales.

    Investing

      Net cash used in  investing  activities  was $659.2  million  for the nine
months ended  November 30, 1997.  Cash used in investing  activities was for the
purchase and origination of mortgage  servicing rights,  the purchase of options
of U.S.  Treasury bond futures as part of HomeSide's  hedging  program,  and for
funding the early pool buyout program.  Other assets  increased $71.7 million to
$164.6  million at  November  30, 1997 from $92.9  million at February  28, 1997
primarily  as a result  of an  increase  in loans  held  for  investment  and an
increase in HomeSide's hedge asset. Future uses of cash for investing activities
will be dependent  on the mortgage  origination  market and  HomeSide's  hedging
needs.  HomeSide is not able to estimate  the timing and amount of cash uses for
future  acquisitions of other mortgage banking  entities,  if such  acquisitions
were to occur.





   Financing

      Net cash provided by financing  activities was $657.0 million for the nine
months  ended  November  30,  1997.  The primary  source of cash from  financing
activities during the period was $750.0 million from the issuance of medium-term
notes. Cash used in financing  activities was used for the payment of debt issue
costs and repayments to HomeSide's line of credit..

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      During  the  nine  months  ended  November  30,  1997,  net  cash  used in
operations was $33.8 million,  net cash used in investing  activities was $659.2
million  and net cash  provided  by  financing  activities  was $657.0  million,
resulting in a net decrease in cash of $36.1 million.  HomeSide  expects that to
the extent cash  generated  from  operations is inadequate to meet its liquidity
needs,  those needs can be met through  financing from its bank credit  facility
and other  facilities  which may be entered  into from time to time,  as well as
from  the  issuance  of debt  securities  in the  public  markets.  Accordingly,
HomeSide  does not  currently  anticipate  that it will make sales of  servicing
rights  to  any  significant   degree  for  the  purpose  of  generating   cash.
Nevertheless, in addition to its cash and mortgage loans held for sale balances,
HomeSide's portfolio of mortgage servicing rights provides a potential source of
funds to meet liquidity  requirements,  especially in periods of rising interest
rates when loan origination volume slows.  Repurchase agreements also provide an
alternative to the bank line of credit for mortgages held for sale.  Future cash
needs are highly  dependent on future loan  production  and  servicing  results,
which are influenced by changes in long-term interest rates.



                           PART II - OTHER INFORMATION

ITEM 1.  Legal Proceedings
      HomeSide is a defendant  in a number of legal  proceedings  arising in the
normal course of business.  HomeSide, in management's  estimation,  has recorded
adequate   reserves  in  the  financial   statements  for  pending   litigation.
Management,  after  reviewing  all actions and  proceedings  pending  against or
involving  HomeSide,  considers  that the  aggregate  liability or loss, if any,
resulting from the final outcome of these  proceedings  will not have a material
effect on the financial position of HomeSide.

      In recent years,  the mortgage  banking industry has been subject to class
action  lawsuits  which  allege   violations  of  federal  and  state  laws  and
regulations,  including the propriety of collecting  and paying various fees and
charges.  Class action  lawsuits may be filed in the future against the mortgage
banking industry.


ITEM 6.  Exhibits and Reports on Form 8-K

    (a) The following documents are filed as a part of this Report:

            Number       Description

               2         Agreement and Plan of Merger dated as of October 25,
                         1997 by and between National  Australia Bank Limited
                         and the  Parent,  HomeSide,  Inc.  (Incorporated  by
                         reference  to  the  Definitive  Proxy  Statement  of
                         HomeSide,  Inc.  filed with the SEC on December  15,
                         1997 (File No. 1-12655)).
              10         Amendment  dated as of September  30, 1997 to Credit
                         Agreement  dated  as  of  January  31,  1997,  among
                         HomeSide   Lending,   Inc.  and  the  Lenders  party
                         thereto.
              11         Statement Regarding Computation of Earnings per share
              27         Financial Data Schedule


      (b)   Reports on form 8-K

         HomeSide  filed a report  on form 8-K  dated October 25, 1997 to report
under "Item 5. Other Events" that HomeSide and  National Australia Bank  Limited
entered into an Agreement and Plan of Merger dated as of October 25, 1997.

                                       15
<PAGE>

                                   SIGNATURES

Pursuant  to the  requirements  of the  Securities  Exchange  Act of  1934,  the
registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
undersigned thereunto duly authorized.

                           HomeSide, Inc.
                           (Registrant)

Date: January 13, 1998     By: /s/Joe K. Pickett 
                               -----------------
                               Joe K. Pickett
                           Chairman of the Board, Chief Executive Officer
                                    and Director (Principal Executive Officer)

Date: January 13, 1998     By: /s/Kevin D. Race
                               ---------------- 
                               Kevin D. Race
                           Vice President, Chief Financial Officer and Treasurer
                                    (Principal Financial and Accounting Officer)



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