FORM 10-Q

                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549



(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, 1996

                                       OR

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


                          Commission File No. 333-06737


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


             Delaware                                         59-3387041
    (State or other jurisdiction of                        (I.R.S. Employer
     incorporation or organization)                       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 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 __  No _x_


<PAGE>



PART I. FINANCIAL INFORMATION

Item 1.  Financial Statements

                                 HOMESIDE, INC.
                      UNAUDITED CONSOLIDATED BALANCE SHEET

                    (Dollars in Thousands, Except Share Data)
                                   (Unaudited)


                                                              November 30, 1996
                                                              -----------------
 ASSETS

 Cash and cash equivalents                                           $    1,183
 Mortgage loans held for sale, net                                    1,101,229
 Mortgage servicing rights receivable, net                            1,339,819
 Accounts receivable                                                    173,145
 Premises and equipment, net                                             29,221
 Other assets                                                           214,114
                                                                     ----------

 Total Assets                                                        $2,858,711
                                                                     ==========

 LIABILITIES AND STOCKHOLDERS' EQUITY
 Notes payable to banks                                              $2,010,813
 Accounts payable and accrued liabilities                               141,555
 Deferred income taxes payable                                           97,139
 Long term debt                                                         221,278
                                                                     ----------

 Total Liabilities                                                    2,470,785

 Common stock:
  Common stock, $.01 par value, 119,610,000 shares authorized and
      34,825,792 shares issued and outstanding                              348
  Class B non-voting common stock, $.01 par value, 195,000 shares
      authorized, and 97,138 shares issued and outstanding                    1
  Class C non-voting common stock, $1.00 par value, 195,000 shares
      authorized, and 97,138 shares issued and outstanding                   97
 Additional paid in capital                                             360,054
 Retained earnings                                                       29,276
                                                                      ---------
                                                                        389,776
 Less: Notes received in payment for capital stock                       (1,850)
                                                                     ----------

 Total Stockholders' Equity                                             387,926

 Total Liabilities and Stockholders' Equity                          $2,858,711
                                                                     ==========


<PAGE>



                                 HOMESIDE, INC.
                   UNAUDITED CONSOLIDATED STATEMENTS OF INCOME

                             (Dollars in Thousands)
                                   (Unaudited)


                                                                    For the
                                              For the Three       Period From
                                               Months Ended    March 16, 1996 to
                                            November 30, 1996  November 30, 1996
                                            -----------------  -----------------
  REVENUES:

  Mortgage servicing fees                        $ 91,636         $ 216,470
  Amortization of mortgage servicing rights       (48,831)         (105,737)
                                                 --------         ---------
       Net servicing revenue                       42,805           110,733

  Interest income                                  25,241            60,230
  Interest expense                                (22,321)          (61,203)
                                                 --------          --------
       Net interest expense                         2,920              (973)

  Net mortgage origination revenue                 16,521            43,604
  Other income                                         79               541
                                                 --------          -------- 
       Total revenue                               62,325           153,905

  EXPENSES:

  Salaries and employee benefits                   20,650            53,307
  Occupancy and equipment                           3,337             8,267
  Servicing losses on investor-owned loans          4,957            12,953
  Other expenses                                   11,711            29,579
                                                 --------          --------
       Total expenses                              40,655           104,106

  Income before income taxes                       21,670            49,799
  Income tax expense                                9,015            20,523
                                                 --------          --------

  Net income                                       12,655            29,276
  Retained earnings at beginning of period         16,621                --
                                                 --------          --------
  Retained earnings at end of period             $ 29,276          $ 29,276
                                                 ========          ========



<PAGE>

<TABLE>


                                 HOMESIDE, INC.
                 UNAUDITED CONSOLIDATED STATEMENT OF CASH FLOWS

                             (Dollars in Thousands)
                                   (Unaudited)
<CAPTION>

                                                                         For the Period From
                                                                          March 16, 1996 to
                                                                          November 30, 1996
                                                                          -----------------
  CASH FLOWS USED IN OPERATING ACTIVITIES:

  <S>                                                                         <C>        
  Net income                                                                  $    29,276
  Amortization                                                                    108,818
  Depreciation                                                                      3,178
  Servicing losses on investor-owned loans                                         12,953
  Deferred income tax expense                                                      20,523
  Capitalized excess servicing rights                                             (16,373)
  Mortgage loans originated and purchased for sale                             (9,081,815)
  Proceeds and principal repayments of mortgage loans held for sale             8,853,510
  Change in accounts receivable                                                   (78,235)
  Change in other assets and accounts payable and accrued liabilities             (33,624)
                                                                               ----------
  Net cash used in operating activities                                          (181,789)

  CASH FLOWS USED IN INVESTING ACTIVITIES:

  Purchase of premises and equipment                                               (3,354)
  Acquisition of mortgage servicing rights                                       (344,288)
  Net purchases of risk management contracts                                      (88,438)
  Acquisition of BBMC, net of cash acquired                                      (133,392)
  Acquisition of BMC, net of cash acquired                                       (106,244)
                                                                              -----------
  Net cash used in investing activities                                          (675,716)

  CASH FLOWS PROVIDED BY FINANCING ACTIVITIES:

  Net borrowings from banks                                                       526,480
  Issuance of bridge financing                                                     90,000
  Repayment of bridge financing                                                   (90,000)
  Issuance of notes                                                               200,000
  Payment of debt issue costs                                                     (20,290)
  Repayment of long term debt                                                        (417)
  Proceeds from issuance of common stock                                          152,915
                                                                              -----------
  Net cash provided by financing activities                                       858,688

  Net increase in cash                                                              1,183
  Cash and cash equivalents at beginning of period                                     --
                                                                              -----------
  Cash and cash equivalents at end of period                                  $     1,183
                                                                              ===========
</TABLE>



<PAGE>



                                 HOMESIDE, INC.
              NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

1.  Basis of Presentation
-------------------------

    The accompanying  unaudited  consolidated  financial statements of HomeSide,
Inc.  ("HomeSide"  or the  "Company")  have been  prepared  in  accordance  with
generally accepted accounting  principles for interim financial  information and
in accordance with 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 of the Company,
all material  adjustments  (consisting of normal recurring accruals)  considered
necessary for a fair presentation have been included.  Operating results for the
period from March 16, 1996 (date operations  began) to November 30, 1996 and the
three  months  ended  November 30, 1996 are not  necessarily  indicative  of the
results that may be expected for the fiscal year ended February 28, 1997.

    The accompanying interim financial statements of HomeSide have been prepared
for the  period  March  16,  1996 to  November  30,  1996 to  coincide  with the
commencement of operations of HomeSide as discussed in "ORGANIZATION"  below and
the end of the Company's  third fiscal  quarter based on a February 28 year end.
The financial statements for the third quarter of fiscal 1997 include the period
September 1, 1996 to November  30,  1996.  The  financial  statements  presented
include  the  results of  operations  of the  Company's  wholly-owned  operating
subsidiary,  HomeSide Lending,  Inc., and beginning June 1, 1996, the results of
operations  of the  servicing  activities of Barnett  Mortgage  Company  ("BMC")
acquired on May 31, 1996.

    References  to the first  quarter of fiscal 1997 relate to the period  March
16, 1996 to May 31, 1996. References to the second quarter of fiscal 1997 relate
to the three months ended August 31, 1996.  References  to the third  quarter of
fiscal 1997 relate to the three  months ended  November  30, 1996.  Year to date
operating results include the period March 16, 1996 to November 30, 1996.

2.  Organization
----------------

    On December 11, 1995,  HomeSide was formed by an investor group,  consisting
of Thomas H. Lee  Company  and  Madison  Dearborn  Partners  (collectively,  the
"Investors"),  and signed a definitive  stock purchase  agreement with The First
National Bank of Boston ("Bank of Boston") for the purpose of acquiring  certain
assets and liabilities of the mortgage banking  business  ("BBMC") owned by Bank
of  Boston.  The  transaction  closed  on  March  15,  1996 and  HomeSide  began
operations on March 16, 1996 through its operating subsidiary, HomeSide Lending,
Inc.


<PAGE>



    On May 31,  1996,  Barnett  Banks,  Inc.  ("Barnett")  sold  certain  of its
mortgage banking  operations,  primarily its servicing portfolio and proprietary
mortgage banking  software  systems,  to HomeSide.  Barnett received cash and an
ownership  interest in HomeSide.  For more information on these acquisitions see
Note 4.

3.  Summary of Significant Accounting Policies
----------------------------------------------

  Use of estimates

    The  preparation  of  financial  statements  in  conformity  with  generally
accepted  accounting  principles  requires  management  to  make  estimates  and
assumptions  that affect the  reported  amounts of assets and  liabilities,  the
disclosure of contingent  liabilities  at the date of the financial  statements,
and the reported  amounts of revenues and expenses during the reporting  period.
Actual results could differ from those estimates.

  Risk Management of Mortgage Loan Originations

    HomeSide  has a risk  management  program in place to offset the risk that a
change in interest  rates will  result in a decrease in the value of  HomeSide's
mortgage  loan  inventory  and  commitments  to originate  loans.  To manage its
interest rate risk exposure,  HomeSide enters into forward sales  agreements and
purchases  option  contracts.  These agreements and contracts are not considered
trading  instruments  and are  primarily  entered  into for purposes of managing
interest rate risk relative to commitments  to originate  mortgage loans against
market value declines resulting from fluctuations in interest rates.

    The cost of option  contracts to manage  HomeSide's  fixed and variable rate
loan  origination  commitments are capitalized and amortized as an adjustment of
gain or loss on the sale of the loan  over  the  life of the  underlying  option
contract.  Unamortized premiums are included in other assets in the accompanying
consolidated  balance sheet.  HomeSide is not exposed to loss beyond its initial
outlay to acquire the option contract.

  Risk Management of Mortgage Servicing Rights

    Mortgage  servicing  rights are a significant  asset of HomeSide and possess
economic  value as they  permit the owner to  receive a portion of the  interest
coupon from the mortgagor for performing specified servicing activities. Because
the  underlying  mortgage loan note permits the borrower to prepay the loan, the
value of the related  servicing rights tends to diminish in periods of declining
interest  rates and increase in value in periods of rising rates.  This tendency
of the mortgage  servicing  rights  portfolio to change in value with changes in
interest  rates  subjects  HomeSide to  substantial  interest  rate risk,  which
directly  affects the volatility of reported  earnings as  capitalized  mortgage
servicing rights are carried at the lower of amortized cost or fair value. It is
the  policy of  HomeSide  to  mitigate  this risk  through  its risk  management
program.

    Qualifying  risk  management  instruments  with a  demonstrated  ability  to
mitigate this risk are used in this  program.  The risk  management  instruments
used by HomeSide 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
contracts  will  tend to move  inversely  with  changes  in value of  HomeSide's
mortgage servicing rights.

    To date,  option contracts on U.S. Treasury bond futures have been purchased
to manage  interest rate risk on HomeSide's  mortgage  servicing  rights.  These
option  contracts  are  designated  as  hedges  on the  purchase  date  and such
designation  must be at a level  at  least  as  specific  as the  level at which
mortgage servicing rights are evaluated for impairment. The option contracts are
marked-to-market  with changes in market value  deferred  and  recognized  as an
adjustment  to the cost of the  related  mortgage  servicing  right  asset being
hedged. As a result, any changes in market value that are deferred are amortized
and  evaluated  for  impairment  in the  same  manner  as the  related  mortgage
servicing rights. Correlation between changes in value of the option and changes
in the value of HomeSide's  mortgage servicing rights is assessed on a quarterly
basis to ensure that high correlation is maintained over the term of the hedging
program.

    At November 30, 1996,  the carrying value of the risk  management  contracts
included in other assets was  $162,351,000,  the market value of the  contracts.
Further,  net gains on risk management contracts of $60,181,000 were deferred as
a component of mortgage  servicing  rights as of November  30, 1996.  During the
third  fiscal  quarter,  $133,348,000  of gains were  deferred as a component of
mortgage  servicing rights,  which offset the deferred losses recorded as of the
end of the second fiscal quarter.  Of the gains deferred during the third fiscal
quarter,  $107,256,000 were realized.  At any point in time,  HomeSide's maximum
loss  exposure  on its option  contracts  is limited to the amount paid for such
contracts.

  Mortgage loans

    Mortgage  loans held for sale are carried at the lower of aggregate  cost or
fair value.  Fair value is based on the  contract  prices at which the  mortgage
loans  will be sold or, if the loans are not  committed  for sale,  the  current
market price.

    Loans are placed on non-accrual  status when any portion of the principal or
interest  is  ninety  days past due or  earlier  when  concern  exists as to the
ultimate  collectibility  of  principal  or  interest.  When loans are placed on
nonaccrual status, the related interest  receivable is reversed against interest
income of the current period. Interest payments received on nonaccrual loans are
applied as a reduction of the  principal  balance when concern  exists as to the
ultimate  collection of principal;  otherwise,  such payments are  recognized as
interest  income.  Loans are removed from  nonaccrual  status when principal and
interest become current and they are estimated to be fully collectible.


<PAGE>



Mortgage servicing rights

    Mortgage  servicing rights are initially  recorded at fair value as of their
date of acquisition or origination. Purchased mortgage servicing rights ("PMSR")
represent the value of rights to service  mortgage  loans  originated by others.
Originated  mortgage  servicing rights ("OMSR")  represent the value of mortgage
servicing rights associated with mortgage loans originated by HomeSide. OMSR are
capitalized in accordance with Statement of Financial  Accounting  Standards No.
122, "Accounting for Mortgage Servicing Rights" ("SFAS 122"). Mortgage servicing
rights are  amortized as a reduction of servicing  fee income over the estimated
servicing  period in proportion to the estimated  future net cash flows from the
loans serviced.

    SFAS 122  also  requires  that  capitalized  mortgage  servicing  rights  be
evaluated for impairment  based on the fair value of these rights.  For purposes
of determining  impairment,  HomeSide's mortgage servicing rights are stratified
based on interest rate and type of loan  (conventional/government).  Impairment,
if any, is recognized  through a valuation  allowance for each impaired  stratum
and included in the amortization of mortgage servicing rights.

    Mortgage   servicing   rights  also  includes  excess   mortgage   servicing
receivables ("EMSR"),  which represent the present value of servicing fee income
in excess of a normal  servicing fee. When loans are sold, the estimated  excess
servicing is  recognized as income and  amortized  over the estimated  servicing
period in proportion to the estimated  future  aggregate net cash flows from the
loans serviced.  Remaining asset balances are evaluated for impairment  based on
current estimates of future discounted cash flows. Such write-downs are included
in amortization of mortgage servicing rights.

    The  following  table  presents a breakdown  of the  components  of mortgage
servicing rights at November 30, 1996:


                                                                 (In thousands)
   Mortgage servicing rights and excess servicing receivables        $1,505,737
   Deferred gains on risk management contracts, net                     (60,181)
                                                                     ---------- 
                                                                      1,445,556
   Less: Accumulated amortization                                      (105,737)
                                                                     ---------- 
                                                                     $1,339,819
                                                                     ==========



<PAGE>


Accounts receivable

    Accounts receivable includes advances,  consisting primarily of payments for
property  taxes  and  insurance  premiums,  as well as  principal  and  interest
remitted  to  investors  before  they are  collected  from  mortgagors,  made in
connection  with loan servicing  activities.  Accounts  receivable also includes
loans purchased from mortgage-backed  securities serviced by HomeSide for others
and mortgage claims filed primarily with the FHA and the VA.

Premises and equipment

    Premises and  equipment  are stated at cost less  accumulated  depreciation.
Depreciation  is computed  using the  straight-line  method  over the  estimated
useful lives of the assets. Leasehold improvements are amortized over the lesser
of the estimated life of the improvement or the term of the lease.

Deferred Charges

    Included in other assets are deferred  charges of $17,209,000,  representing
costs  incurred  to obtain a $2.5  billion  line of credit  from an  independent
syndicate  of banks  and costs  incurred  in the  issuance  of  $200,000,000  of
long-term  debt. The deferred  charges are being  amortized to interest  expense
over the terms of the  related  line of credit (3 years) and  long-term  debt (7
years).

Mortgage servicing fees

    Mortgage  servicing fees represent fees earned for servicing  mortgage loans
owned by  investors.  The  fees  are  generally  calculated  on the  outstanding
principal  balances of the loans  serviced  and are  recognized  as income on an
accrual basis.

Servicing losses on investor-owned loans

    HomeSide  records  losses  attributable  to  servicing  FHA and VA loans for
investors.  These amounts include actual losses for final  disposition of loans,
accrued interest for which payment has been denied,  and estimates for potential
losses based on HomeSide's experience as a servicer of government loans.

    A  reserve  for  estimated  servicing  losses  on  investor-owned  loans  is
available for potential losses related to the mortgage  servicing  portfolio and
is included in the balance of accounts payable and accrued liabilities.

Interest expense

    Interest   expense  is  reduced  by  credits  received  on  borrowings  with
depository institutions for custodial balances placed with such institutions.

Net mortgage origination revenue

    Net mortgage  origination  revenue  includes  gains and losses from sales of
mortgage loans.

Income taxes

    HomeSide accounts for income taxes in accordance with Statement of Financial
Accounting   Standards  No.  109,  "Accounting  for  Income  Taxes."  Under  the
Statement,  current tax liabilities or assets are recognized  through charges or
credits  to the  current  tax  provision  for the  estimated  taxes  payable  or
refundable for the current year.

    Deferred tax liabilities are recognized for temporary  differences that will
result in amounts  taxable in the future and deferred tax assets are  recognized
for  temporary  differences  and tax benefit  carryforwards  that will result in
amounts  deductible or creditable in the future. Net deferred tax liabilities or
assets are recognized  through charges or credits to the deferred tax provision.
A deferred tax valuation  reserve is  established  if it is more likely than not
that all or a portion of the deferred  tax assets will not be realized.  Changes
in the deferred tax valuation reserve are recognized  through charges or credits
to the deferred tax provision.

    The effect of enacted changes in tax law, including changes in tax rates, on
deferred tax assets and  liabilities  is recognized in income in the period that
includes the enactment date.

4.  Acquisitions
----------------

Acquisition of BancBoston Mortgage Corporation

    On  March  15,  1996,  HomeSide  acquired  from  Bank of  Boston  all of the
outstanding stock of BBMC, which was subsequently renamed HomeSide Lending, Inc.
Certain  assets  and  liabilities  of BBMC  were  retained  by  Bank of  Boston,
including BBMC's mortgage retail production operations in New England.

    HomeSide paid  $139,500,000 in cash and issued  $86,750,000 of common stock,
$.01 par value per  share,  of  HomeSide  ("Common  Stock") to Bank of Boston in
consideration  for certain assets,  net of assumed  liabilities and the stock of
BBMC.  The Common Stock issued to Bank of Boston was assigned a value of $10.294
per share,  the same per share  amount paid by the  Investors.  On May 31, 1996,
HomeSide paid an additional  $5,000,000 to Bank of Boston in connection with the
closing of the BMC  acquisition.  The  transaction  was  accounted for under the
purchase  method of accounting  and,  accordingly,  the results of operations of
HomeSide  Lending,  Inc. are included from the date of purchase.  The assets and
liabilities  of BBMC were recorded by HomeSide at their fair values at March 15,
1996, which totaled $1,525,314,000 and $1,221,808,000,  respectively.  The total
purchase  price paid for BBMC,  including  transaction  costs and interest,  was
$247,403,000.  The  excess of fair value of net  assets  acquired  over cost was
$56,103,000 and was allocated  entirely to mortgage servicing rights. The excess
is being  amortized  over the  estimated  servicing  period in proportion to the
estimated  future net cash flows from the loans serviced,  in the same manner as
mortgage servicing rights.

Acquisition of Barnett Mortgage Company

    On May 31, 1996,  HomeSide  acquired  from Barnett  certain  assets,  net of
assumed  liabilities,  and  the  outstanding  common  stock  of BMC,  which  was
subsequently renamed HomeSide Holdings,  Inc. (the "BMC Acquisition").  HomeSide
Holdings,  Inc.  then became the parent  company of HomeSide  Lending,  Inc. and
transferred all of the assets and liabilities of HomeSide  Holdings,  Inc., with
the exception of certain  portions of HomeSide  Holdings,  Inc.'s GNMA servicing
rights,  to HomeSide  Lending,  Inc.  Certain assets and liabilities of BMC were
retained by Barnett,  including those assets of BMC and its subsidiaries  (other
than Honolulu  Mortgage  Company,  Inc.) associated with the loan origination or
production activities of such entities.

    HomeSide paid  $228,234,000 in cash to Barnett in consideration  for certain
assets, net of assumed liabilities, and the stock of BMC. In connection with the
BMC Acquisition,  an affiliate of Barnett purchased  11,461,400 shares of Common
Stock for an aggregate purchase price of $117,985,000, or $10.294 per share, the
same per share amount paid by the Investors and Bank of Boston.  The transaction
was accounted for under the purchase method of accounting and, accordingly,  the
results of operations of HomeSide include BMC from the date of acquisition.  The
assets and  liabilities of BMC were recorded by HomeSide at their fair values at
May 31, 1996, which totaled  $764,825,000 and  $516,129,000,  respectively.  The
total purchase price paid for BMC, including transaction costs and interest, was
$235,432,000.  The  excess of fair value of net  assets  acquired  over cost was
$13,264,000 and was allocated  entirely to mortgage servicing rights. The excess
is being  amortized  over the  estimated  servicing  period in proportion to the
estimated  future net cash flows from the loans serviced,  in the same manner as
mortgage servicing rights.

    The assets  acquired  and  liabilities  assumed in each of the  transactions
noted above have been recorded at their  estimated  fair value as of the date of
the acquisition.  Changes in those estimates may affect the amounts recorded and
the resulting allocation of purchase price.



<PAGE>


    Unaudited pro forma statements of operations for the year ended December 31,
1995 and the period from March 16, 1996 to November 30, 1996,  assuming BBMC and
BMC had been acquired as of January 1, 1995,  and assuming BMC had been acquired
as of March 15, 1996 are as follows (in millions):


                                             Pro Forma         Pro Forma Period
                                             Year Ended        March 16, 1996 to
                                          December 31, 1995    November 30, 1996
                                         -------------------  ------------------
 Net servicing revenue                        $ 237.4               $ 121.5
 Net warehouse interest (expense) revenue        (5.5)                  0.7
 Net mortgage origination revenue                 0.7                  44.6
 Other income                                     0.7                   0.6
                                               ------                ------
   Total revenues                               233.3                 167.4
 Expenses                                      (144.1)               (117.2)
                                               ------                ------
 Income before income taxes                      89.2                  50.2
 Income tax expense                             (36.5)                (20.7)
                                               ------                ------
   Net income                                  $ 52.7                $ 29.5
                                               ======                ======

    The purchase  accounting  adjustments  in the above pro forma  statements of
operations  are based on the  actual  purchase  price  and the  amount of assets
actually acquired. In addition,  gains on sales of mortgage servicing rights are
not included in net servicing revenue in these pro forma results. No adjustments
have been made for restructuring  costs that might have been incurred during the
periods  presented  or for cost  efficiencies  that  might  have been  realized.
Accordingly, these pro forma results are not indicative of future results.

5.  Notes Payable to Banks
--------------------------

    HomeSide  borrows  funds on a demand basis from a syndicate of banks under a
$2.5  billion line of credit  collateralized  by  substantially  all of HomeSide
Lending, Inc.'s assets. The line of credit is used to provide funds for HomeSide
Lending,  Inc.'s  business  of  making,  originating,  acquiring  and  servicing
mortgage loans. The line of credit includes both a warehouse credit facility and
servicing-secured  credit facility,  of which the servicing  secured facility is
capped at $950 million.  The line of credit terminates on May 31, 1999. The line
of credit agreement  contains covenants that impose limitations and restrictions
on  HomeSide,   including  the  maintenance  of  certain  net  worth  and  ratio
requirements.  The amount of the unused  line of credit was  $449,261,000  as of
November 30, 1996.

    Drawings  under the 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) a
eurodollar  rate. As of November 30, 1996, the weighted average interest rate on
the amounts borrowed was 5.98%.



<PAGE>


6.  Long Term Debt
------------------

    On May 14, 1996,  HomeSide  issued  $200,000,000  of 11.25% notes  ("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 Notes are
redeemable  at the option of  HomeSide,  in whole or in part,  at any time on or
after May 15, 2001, at certain pre-set redemption prices. The indenture contains
covenants that impose  limitations and  restrictions on HomeSide,  including the
maintenance  of certain net worth and ratio  requirements.  In  accordance  with
certain of these  restrictions,  effective August 15, 1996, the interest rate on
the Notes was increased to 11.75% until the exchange notes  discussed below were
issued.

    The Notes were  initially  issued as part of a private  placement  offering.
HomeSide filed a Form S-4 with the SEC to register  notes,  with terms identical
to the  Notes,  under the  Securities  Act of 1933 (such  registered  notes also
referred to herein as the  "Notes").  The  registration  statement  was declared
effective during October 1996. The exchange was completed on December 9, 1996.

    HomeSide is in the process of  registering  common stock for issuance to the
public.  A portion of the proceeds from such  issuance,  which is expected to be
completed  during the  fourth  quarter  of fiscal  1997,  is to be used to repay
$70,000,000  in principal  amount of the Notes prior to maturity.  The indenture
governing  the terms of the Notes  requires  that  such  repayment  be made at a
11.25%  premium.  Therefore,  HomeSide  expects  to record a loss from the early
extinguishment  of debt during the fourth  quarter of fiscal 1997.  In addition,
the portion of deferred  charges  associated  with the debt to be repaid will be
written-off and included in the determination of loss on early extinguishment of
debt. The total loss is estimated to be  approximately  $10,500,000,  $6,500,000
net of tax, and will be recorded as an extraordinary item.

    HomeSide also has a mortgage note payable on its headquarters  building that
is due in 2017 and bears interest at 9.50%.  HomeSide's  main office building is
pledged as collateral.  Principal  payments due on the mortgage note payable are
as follows:


                      Fiscal Year    (In thousands)
                          1997           $    56
                          1998               234
                          1999               258
                          2000               283
                          2001               312
                          Thereafter      12,481
                                         -------
                                         $13,624
                                         =======



<PAGE>


7.  Stockholders' Equity
------------------------

    On March 15, 1996, in connection with the BBMC acquisition discussed in Note
4, the Investors  contributed  cash of  $107,250,000  for  10,418,569  shares of
Common Stock. Also on March 15, 1996, HomeSide issued 8,427,155 shares of Common
Stock and cash to Bank of Boston in exchange  for BBMC.  The Common Stock issued
to Bank of Boston was assigned a value of $86,750,000.

    Simultaneously  with the  closing  of the BBMC  acquisition,  HomeSide  also
issued 97,138  shares of its Class B Non-Voting  Common Stock ("Class B shares")
to Smith  Barney,  Inc. in  consideration  of  services  rendered to HomeSide in
connection  with the BBMC  acquisition.  Bank of Boston also paid  $1,000,000 in
cash for 97,138 shares of HomeSide's  Class C Non-Voting  Common Stock ("Class C
shares").  Bank of Boston then sold the Class C shares to an unaffiliated  third
party.

    On May 31, 1996, in connection with the BMC Acquisition discussed in Note 4,
Bank of Boston,  the Investors and certain  directors and executive  managers of
HomeSide contributed a total of approximately  $46,015,000 in cash for 4,470,065
shares of Common Stock. In August 1996 and November 1996,  another 19,448 shares
and 29,155  shares,  respectively,  were  purchased  by certain  executives  for
approximately $200,000 and $300,000, respectively.  Approximately, $1,850,000 of
the amount  contributed  by certain  directors  and  management  was financed by
HomeSide  Lending,  Inc.  and,  accordingly,  is  reported  as  a  reduction  of
stockholders'  equity  of  HomeSide.  Also  on May  31,  1996,  HomeSide  issued
11,461,400  shares of Common  Stock and cash to Barnett in exchange for BMC. The
Common Stock issued to Barnett was assigned a value of $117,985,000.

    The  following is a breakdown  of  HomeSide's  Common Stock  ownership as of
November 30, 1996, including the effect of the BMC Acquisition:


                                              Cash             Shares
                                           Contributed         Issued
         Bank of Boston                   $117,985,000       11,461,400
         Barnett                           117,985,000       11,461,400
         Investors                         117,985,000       11,461,400
         Directors and management            4,545,000          441,592
                                          ------------       ----------
                                          $358,500,000       34,825,792
                                          ============       ==========

    HomeSide is in the process of registering  7,350,000  shares of Common Stock
(excluding  the  over-allotment  option) for  issuance to the public.  The total
proceeds  expected to be received from the issuance,  net of underwriting  fees,
and estimated  expenses is  $115,141,000  and will be used to repay a portion of
long-term debt, and reduce amounts outstanding under the bank credit agreement.
The issuance is expected to occur during the fourth quarter of fiscal 1997.



<PAGE>


8.  Stock Options
-----------------

    HomeSide has  established the HomeSide 1996 Employee Stock Option Plan under
which 582,845  shares of Common Stock are reserved for issuance.  Options issued
under the plan may be either  non-qualified  or incentive  stock options and the
options will be  exercisable  at such prices as are set by  HomeSide's  board of
directors.  Under the plan,  options  will vest in five  equal  installments  in
arrears.  During the period  March 16, 1996 to  November  30,  1996,  options to
purchase  447,066 shares were granted at an exercise price of $10.294 per share.
To date,  there have been no exercises of options and options to purchase  6,494
shares were canceled under this plan.

    HomeSide has also adopted a 1996 Time  Accelerated  Restricted  Stock Option
Plan under which  1,165,724  shares of Common Stock are  reserved for  issuance.
Options granted under this plan will be non-qualified and will be exercisable at
such prices as are set by the board of directors. Options granted under the plan
will vest nine years from the date of grant.  Vesting will  accelerate  upon the
achievement of certain performance criteria. During the period March 16, 1996 to
November  30,  1996,  options to  purchase  894,132  shares  were  granted at an
exercise  price of $10.294 per share.  To date,  there have been no exercises of
options and options to purchase 12,988 shares were canceled under this plan.

    There was no  compensation  expense  associated with the above option grants
since the  exercise  price was equal to the  estimated  fair value of the Common
Stock at the date of grant.

9.  Supplemental Cash Flow Information
--------------------------------------

    During the period  March 16, 1996 to November 30,  1996,  HomeSide  extended
loans totaling  $1,850,000 to certain  members of management in connection  with
their purchase of shares of Common Stock.

    In  connection  with the  acquisitions  of BBMC and BMC,  HomeSide  recorded
non-cash assets and assumed  liabilities,  including fair value adjustments,  of
approximately  $2,251,676,000 and $1,737,937,000,  respectively.  As part of the
purchase price of BBMC and BMC, HomeSide issued 8,427,138 shares of Common Stock
with a value of $86,750,000  and 11,461,400  shares of Common Stock with a value
of  $117,985,000  to Bank of Boston  and  Barnett,  respectively.  In  addition,
HomeSide issued 97,138 shares of Class B shares in exchange for certain services
performed in connection  with the  acquisition  of BBMC. The Class B shares were
valued at $10.294 per share, or $1,000,000.

    HomeSide  paid   $57,680,000  and  $1,000  of  interest  and  income  taxes,
respectively, during the period ended November 30, 1996.



<PAGE>


10.  Disclosures About Fair Value of Financial Instruments
----------------------------------------------------------

    SFAS No 107, Disclosures about Fair Value of Financial Instruments, requires
disclosure of fair value information about financial  instruments whether or not
recognized in the balance  sheet,  for which it is  practicable to estimate fair
value.

    Financial  instruments  include such items as mortgage  loans held for sale,
mortgage loans held for investment,  interest rate contracts, notes payable, and
other instruments.

    Fair value  estimates  are made as of a specific  point in time based on the
characteristics   of  the  financial   instruments   and  the  relevant   market
information.  Where  available,  quoted  market prices are used. In other cases,
fair values are based on estimates  using other  valuation  techniques,  such as
discounting estimated future cash flows using a rate commensurate with the risks
involved or other acceptable methods. These techniques involve uncertainties and
are  significantly  affected  by the  assumptions  used and the  judgments  made
regarding risk  characteristics of various financial  instruments,  prepayments,
discount  rates,   estimates  of  future  cash  flows,   future  suspected  loss
experience, and other factors. Changes in assumptions could significantly affect
these  estimates.  Derived  fair  value  estimates  cannot be  substantiated  by
comparison to independent  markets and, in many cases,  could not be realized in
an  immediate   sale  of  the   instrument.   Also  because  of  differences  in
methodologies  and assumptions  used to estimate fair value,  the Company's fair
values should not be compared to those of other companies.

    Under the Statement,  fair value  estimates are based on existing  financial
instruments  without  attempting  to estimate  the value of  anticipated  future
business  and the  value of  assets  and  liabilities  that  are not  considered
financial instruments.  Accordingly,  the aggregate fair value amounts presented
do not represent the  underlying  value of the Company.  For certain  assets and
liabilities,  the information  required under the Statement is supplemented with
additional information relevant to an understanding of the fair value.

    The methods and  assumptions  used to estimate the fair values of each class
of financial instruments are as follows:

Cash and cash equivalents

    The carrying amount reported in the balance sheet approximates fair value.

Mortgage loans held for sale

    Fair  values are based on the  estimated  value at which the loans  could be
sold in the secondary  market.  These loans are priced to be sold with servicing
rights retained, as is the Company's normal business practice.



<PAGE>


Accounts receivable

    Carrying  amounts are considered to approximate fair value. All amounts that
are assumed to be uncollectible within a reasonable time are written off.

Risk management contracts

    Fair values are estimated based on actual market quotes or option models.

Notes payable to banks

    The carrying  amount of the notes  payable to banks  reported in the balance
sheet approximates its fair value.

Long-term debt

    Fair value of long-term  debt is estimated by discounting  estimated  future
cash flows using a rate commensurate with the risks involved.

Commitments to originate mortgage loans

    Fair value is estimated using quoted market prices for securities  backed by
similar loans adjusted for differences in loan characteristics.

Forward contracts to sell mortgages

    Forward  contracts  to  sell  mortgages,  which  represent  legally  binding
agreements to sell loans to permanent  investors at a specified  price or yield,
are valued using market  prices for  securities  backed by similar loans and are
reflected in the fair values of the mortgages  held for sale, to the extent that
these commitments relate to mortgage loans already originated, or of the related
commitments to extend credit.

Options on mortgage-backed securities

    The fair values of options are estimated  based on actual market quotes.  In
some  instances,  quoted  prices for the  underlying  loans or option models are
used.



<PAGE>


Fair Value

    The fair values of the Company's  financial  instruments  as of November 30,
1996 are as follows:


                                                       Carrying        Fair
                                                        Amount         Value
      ASSETS
      Cash and cash equivalents                     $     1,183     $    1,183
      Mortgage loans held for sale                    1,101,229      1,101,229
      Accounts receivable                               173,145        173,145
      Risk management contracts                         162,351        162,351
      Other assets                                       51,763         51,763

      LIABILITIES
      Notes payable to banks                          2,010,813      2,010,813
      Long-term debt                                    221,278        221,278

      OFF-BALANCE SHEET(1)
      Commitments to originate mortgage loans                --         20,836
      Mandatory forward contracts to sell mortgages          --        (19,954)
      Options on mortgage-backed securities                  --           (391)


----------

(1) Parenthesis denote a liability

    Fair  value  estimates  are made as of a  specific  point in time,  based on
relevant  market data and  information  about the  financial  instrument.  These
estimates do not reflect any premium or discount that could result from offering
for sale the  Company's  entire  holding of a particular  financial  instrument.
Because no active  market  exists for some  portion of the  Company's  financial
instruments,  fair  value  estimates  are based on  judgments  regarding  future
expected loss experience,  current economic  conditions,  current interest rates
and prepayment trends,  risk  characteristics of various financial  instruments,
and other factors.

    These  estimates  are  subjective  in nature and involve  uncertainties  and
matters of  significant  judgment  and,  therefore,  cannot be  determined  with
precision.  Changes in any of these  assumptions  used in calculating fair value
would also significantly affect the estimates. Further, the fair value estimates
were  calculated as of November 30, 1996.  Changes in market  interest rates and
prepayment assumptions could significantly change the fair value.



<PAGE>


11.  Risk Management of Financial Instruments
---------------------------------------------

    As  discussed  in Note  3,  HomeSide  purchases  options  contracts  on U.S.
Treasury  bond futures to manage the interest  rate risk related to the value of
HomeSide's  mortgage  servicing  rights. A summary of HomeSide's  investments in
purchased option instruments as of November 30, 1996 is as follows:


  Notional amount of U.S. Treasury bond future options              $3.5 billion
  Fair value of outstanding options                               $162.4 million

    Cash requirements for HomeSide's option contracts are limited to the initial
premium paid. The amount of contracts purchased depends on certain factors, such
as interest rates and growth in the mortgage  servicing  portfolio.  HomeSide is
subject to market risk to the extent that interest rates fluctuate; however, the
purpose of the option contracts is to hedge the value of its mortgage  servicing
rights  portfolio,  which tends to react  inversely with changes in the value of
HomeSide's option  contracts.  HomeSide's credit risk on its option contracts is
limited  since the option  contracts  are traded on a national  exchange,  which
guarantees performance by the counterparty.

12.  Contingencies
------------------

    HomeSide,  along with its subsidiaries,  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 liabilities
or loss, if any,  resulting from the final outcome of these proceedings will not
have a material  effect on the  financial  position,  operations or liquidity of
HomeSide.

    For five years  following the  consummation  of the BMC  Acquisition,  which
occurred on May 31,  1996,  Barnett is  obligated  to  repurchase  or  reimburse
HomeSide for any credit losses  related to $101.0 million of loans serviced with
recourse,  which  is less  than  1.0% of  HomeSide's  total  mortgage  servicing
portfolio.


<PAGE>



13.  Subsequent Events
----------------------

In December 1996 the Company filed a Registration Statement in connection with a
public offering of its Common Stock.  Immediately prior to the effective date of
the  Registration  Statement (i) the Certificate of Incorporation of the Company
will be  amended to change the title of the  Company's  Class A Common  Stock to
Common  Stock and to  increase  the number of shares of capital  stock which the
Company is authorized to issue to 120.0 million shares of capital stock of which
119,610,000  shares  will be Common  Stock  (voting),  par value $.01 per share,
195,000  shares will be Class B Common  Stock  (non-voting),  par value $.01 per
share and 195,000  shares will be Class C Common Stock  (non-voting),  par value
$1.00  per  share;  and (ii)  the  Company  will  effect a 17 for 1 split of its
capital  stock in the form of a  1,600%  stock  dividend.  Such  stock  split is
reflected throughout these Financial Statements.


<PAGE>


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

General

    HomeSide,  Inc.  ("HomeSide" or the "Company") is a holding company,  owning
100% of the outstanding common stock of HomeSide  Holdings,  Inc., which in turn
owns 100% of the outstanding common stock of HomeSide Lending, Inc. HomeSide was
formed on December 11, 1995 by an investor  group,  consisting  of Thomas H. Lee
Company and its  affiliates and Madison  Dearborn  Partners  (collectively,  the
"Investors"),  and signed a definitive  stock purchase  agreement with The First
National Bank of Boston ("Bank of Boston" or "BKB") for the purpose of acquiring
certain assets and liabilities of the mortgage banking business ("HLI") owned by
Bank of Boston.  The  transaction  closed on March 15, 1996 and  HomeSide  began
operations on March 16, 1996 through its operating subsidiary, HomeSide Lending,
Inc.

    On May 31,  1996,  Barnett  Banks,  Inc.  ("Barnett")  sold  certain  of its
mortgage  banking  operations  ("HHI"),  primarily its  servicing  portfolio and
proprietary  mortgage banking software  systems,  to HomeSide.  Barnett received
cash and an  ownership  interest  in  HomeSide.  For more  information  on these
acquisitions see Note 4 of Notes to Consolidated Financial Statements. Since May
31, 1996, each of the Investors as a group, Bank of Boston and Barnett has owned
approximately  one-third of HomeSide.  Barnett Mortgage Company was subsequently
renamed HomeSide Holdings, Inc.

    HomeSide  has  adopted a  February  28 fiscal  year  end.  The  consolidated
financial  statements  of HomeSide  have been  prepared for the period March 16,
1996 to  November  30,  1996 to  coincide  with the end of the  Company's  third
quarter of fiscal 1997.  HomeSide did not have any operations prior to March 16,
1996.  The  purchase  method  of  accounting  was  used  for  the  HLI  and  HHI
acquisitions  and,  accordingly,  assets acquired and  liabilities  assumed were
recorded at their estimated fair values at the date of acquisition.

    Comparative  financial statements for the same period in the prior year have
not been presented due to a lack of  comparability  between HomeSide and HLI and
HHI. As noted above, the assets acquired and liabilities  assumed by HomeSide in
each of the acquisitions  were recorded at their estimated fair values as of the
date of acquisition.  As a result, HomeSide's operating results are not directly
comparable  to HLI and  BMC  historical  operating  results  due,  in  part,  to
different  balance  sheet  valuations  (estimated  fair  value  as  compared  to
historical cost). In addition,  certain production channels were retained by HLI
and all of BMC's  production  channels were retained by Barnett.  The results of
operations  for the three months ended  November 30, 1996 are,  therefore,  most
directly  comparable  to the results of  operations  for the three  months ended
August 31, 1996.  Results of operations prior to May 31, 1996 do not include the
results of operations of HHI, which was acquired by the Company on May 31, 1996.

    Mortgage banking is a specialized  branch of the financial services industry
which  primarily   involves  (i)  originating  and  purchasing   mortgage  loans
("origination"  and/or  "production");  (ii) selling the originated mortgages to
third parties either as mortgage-backed securities or as whole loans ("secondary
marketing");  (iii)  servicing  of  mortgage  loans on  behalf  of the  ultimate
purchasers,  which  includes  the  collection  and  disbursement  of payments of
mortgage  principal  and  interest,  the  collection  of  payments  of taxes and
insurance premiums to pay property taxes and insurance premiums,  and management
of certain loan default  activities  (collectively,  "servicing");  and (iv) the
purchase and sale of the rights to service mortgage loans.

    Mortgage bankers originate loans generally  through two channels:  wholesale
and direct.  Wholesale  origination  involves the  origination of mortgage loans
from  sources  other  than  homeowners,  including  mortgage  brokers  and other
mortgage lenders.  Direct origination  typically includes (i) networks of retail
loan offices with sales staff that solicit business from  homeowners,  realtors,
builders,   and  other  real  estate   professionals,   (ii)  centers  that  use
telemarketing,  direct mail,  and  advertising  to market loans directly to home
buyers or homeowners,  (iii)  affinity and  co-branding  partnerships,  and (iv)
corporate  relocation programs.  Once originated or purchased,  mortgage bankers
hold the  loans  temporarily  ("warehousing")  until  they are  sold,  typically
earning an interest  spread equal to the difference  between the loan's interest
rate and the cost of financing the loan.  Each loan is sold either  excluding or
including  the  associated  right to service the loan  ("servicing  retained" or
"servicing released," respectively).

    Mortgage  bankers rely mainly on  short-term  borrowings,  such as warehouse
lines,  to finance the  origination of mortgages  that are then typically  sold.
Mortgage  bankers also borrow on a longer term basis to finance their  servicing
assets and working capital  requirements.  Revenues  consist  primarily of those
related to servicing  and, to a lesser  extent,  fees and interest  spreads from
originations.  The  major  expenses  of  a  mortgage  banker  include  costs  of
financing,  operating  costs  related  to  origination  and  servicing  and  the
amortization of mortgage servicing rights.

    Mortgage  bankers  typically  seek to retain the rights to service the loans
they  originate and to acquire  rights to service  additional  loans in order to
generate  recurring  fee income.  The purchase and sale of servicing  rights can
occur on a loan by loan basis ("flow") or on a portfolio  (group of loans) basis
("bulk" or  "mini-bulk").  Prices for servicing rights are typically stated as a
multiple of the servicing fee or as a percentage  of the  outstanding  UPB for a
group of mortgage  loans.  Values of servicing  portfolios are determined on the
basis of the present  value of the servicing fee income stream (net of servicing
costs) expected to be received over the estimated life of the loans.  The assets
of a mortgage  banking company  consist  primarily of loans in warehouse and the
value of the servicing rights purchased  ("purchased  mortgage servicing rights"
or "PMSR") or originated ("originated mortgage servicing rights" or "OMSR").



<PAGE>


    The  following  operating  statistics  for HomeSide are  presented to aid in
understanding the results of operations and financial  condition of HomeSide for
the period  March 16, 1996 to May 31,  1996,  and each of the three months ended
August 31, 1996 and  November 30, 1996 and the period March 16, 1996 to November
30, 1996.  References  to the first  quarter of fiscal 1997 relate to the period
March 16, 1996 to May 31, 1996.  References to the second quarter of fiscal 1997
relate to the three  months ended  August 31, 1996 and  references  to the third
quarter of fiscal 1997 relate to the three months ended November 30, 1996.

  Loan Production Activities


<TABLE>
<CAPTION>
                                   For the Period     For the Three      For the Three        For the Period
                                   March 16, 1996      Months Ended       Months Ended        March 16, 1996
                                   to May 31, 1996    August 31, 1996   November 31, 1996    November 31, 1996  
                                   ---------------    ---------------   -----------------    -----------------
                                                                                               
                                                                  (dollars in millions)
<S>                                     <C>                 <C>                <C>               <C>
Correspondent (includes BKB
   and Barnett)                         $1,893              $2,950             $3,249            $  8,092
Co-issue (a)                             1,419               2,208              1,985               5,612
Broker                                     220                 155                168                 543
                                        ------              ------             ------             -------
Total wholesale                          3,532               5,313              5,402              14,247
Direct                                     248                 179                139                 566
                                        ------              ------             ------             -------      
Total purchases                          3,780               5,492              5,541              14,813
Bulk acquisitions                           --               4,073                 --               4,073
                                        ------              ------             ------             -------      
Total purchases and acquisitions        $3,780              $9,565             $5,541             $18,886
                                        ======              ======             ======             =======
----------

<FN>
(a) Co-issue  production  represents  the  purchase of  servicing  rights from a
 correspondent  under  contracts  to deliver  specified  volumes on a monthly or
 quarterly  basis.  The substance of this  transaction is the purchase of a loan
 and mortgage  servicing right with the instantaneous  sale of the loan with the
 servicing right retained.  Amounts  represent the unpaid  principal  balance of
 mortgage debt to which the acquired servicing rights relate.
</FN>
</TABLE>

    During each of the second and third quarters of fiscal 1997, HomeSide's loan
production totaled  approximately $5.5 billion.  Total loan production increased
from $3.8  billion in the period  March 16, 1996 to May 31, 1996 to $5.5 billion
for the three  months  ended  August  31,  1996.  This  increase  was due to the
additional  production resulting from the acquisition of HHI on May 31, 1996 and
growth in HomeSide's existing wholesale channel. In addition, HomeSide made bulk
servicing acquisitions of $4.1 billion during the second quarter of fiscal 1997.


<PAGE>



  Servicing Portfolio
<TABLE>
<CAPTION>
                                  For the Period        
                                   March 1, 1996    For the Three      For the Three      For the Period
                                        to          Months Ended        Months Ended     March 1, 1996 to
                                   May 31, 1996   August 31, 1996    November 30, 1996   November 30, 1996
                                   ------------   ---------------    -----------------   -----------------
                                                           (dollars in millions)
   <S>                                <C>             <C>                 <C>                <C>
   Balance at beginning
      of period                       $42,907         $78,391             $85,835            $42,907
   Acquisition of HHI                  33,082              --                  --             33,082
   Other additions                      4,102           9,842               5,244             19,188
                                      -------         -------             -------            -------
        Total additions                37,184           9,842               5,244             52,270
                                      -------         -------             -------            -------
   Scheduled amortization                 235             494                 517              1,246
   Prepayments                          1,321           1,702               1,529              4,552
   Foreclosures                           130             137                 106                373
   Sale of servicing                       14              65                 221                300
                                      -------         -------             -------            -------
        Total reductions                1,700           2,398               2,373              6,471
                                      -------         -------             -------            -------
   Balance at end of period           $78,391         $85,835             $88,706            $88,706
                                      =======         =======             =======            =======
</TABLE>

    At November 30, 1996,  HomeSide's servicing portfolio stood at $88.7 billion
compared to $85.8 billion at August 31, 1996,  $78.4 billion at May 31, 1996 and
$42.9 billion at March 1, 1996.  The number of loans being  serviced at November
30, 1996 was 1,085,000,  compared to 1,059,000 as of August 31, 1996, 984,000 as
of May 31, 1996 and 510,000 as of March 1, 1996. HomeSide's strategy is to build
its  mortgage  servicing  portfolio  and  benefit  from the  economies  of scale
inherent in the business.

Results of Operations

  Summary

    HomeSide  reported net income of $12.7  million  during the third quarter of
fiscal 1997 compared to net income of $10.1 million during the second quarter of
fiscal 1997 and $6.6 million during the first quarter of fiscal 1997. Net income
for the period  March 16, 1996 to November  30,  1996 was $29.3  million.  Total
revenue for the third  quarter of fiscal  1997 was  primarily  comprised  of net
servicing  revenue of $42.8 million,  net interest revenue of $2.9 million,  and
net mortgage origination revenue of $16.5 million. These revenues were partially
offset by operating  expenses of $40.7 million and income taxes of $9.0 million.
The primary reason for the growth in revenues was increased net interest revenue
during the third  quarter of fiscal 1997 as  compared  to the second  quarter of
fiscal 1997.  Higher average balances of mortgage loans held for sale during the
third fiscal quarter  compared to the second fiscal  quarter  contributed to the
$3.0 million  increase in interest income.  Lower short-term  interest rates and
the improved pricing on borrowings  under the Bank Credit Agreement  lowered the
interest  expense for third quarter of fiscal 1997 compared to the second fiscal
quarter.



<PAGE>


    HomeSide  reported net income of $10.1 million  during the second quarter of
fiscal 1997  compared to net income of $6.6 million  during the first quarter of
fiscal 1997. Total revenue for the second quarter was primarily comprised of net
servicing revenue of $42.9 million and net mortgage origination revenue of $16.3
million.  These  revenues were partially  offset by operating  expenses of $40.8
million,  net  interest  expense of $1.7  million and income tax expense of $7.0
million. The primary reason for the increase in revenues and expenses during the
second  quarter as compared to the first quarter was the  acquisition  of HHI on
May 31,  1996.  Results  of  operations  for HHI are  included  from the date of
acquisition  and,  therefore,  are not included in  HomeSide's  first quarter of
fiscal 1997 results.

  Net Servicing Revenue

    During the third quarter of fiscal 1997,  HomeSide had net servicing revenue
of $42.8 million,  compared to net servicing revenue of $42.9 million during the
second quarter of fiscal 1997. Net servicing revenue during the third quarter of
fiscal 1997 was comprised of mortgage servicing fees of $91.6 million, offset by
mortgage servicing rights amortization of $48.8 million. Mortgage servicing fees
generally range from 0.25% to 0.50% of the declining  principal  balances of the
loans per annum.  HomeSide's  weighted  average  servicing  fee during the third
quarter of fiscal 1997 was 0.368%  compared to 0.367% during the second  quarter
of fiscal 1997.  Amortization of mortgage  servicing rights is recorded over the
estimated  servicing  period in  proportion to estimated  servicing  revenue and
increased  from  $40.5  million in the  second  quarter of fiscal  1997 to $48.8
million  in the third  quarter  of fiscal  1997 as a result of a higher  average
servicing  portfolio  balance  and higher  projected  mortgage  loan  prepayment
speeds.

    During the second quarter of fiscal 1997, HomeSide had net servicing revenue
of $42.9 million,  compared to net servicing revenue of $25.0 million during the
first quarter of fiscal 1997. Net servicing revenue during the second quarter of
fiscal 1997 was comprised of mortgage servicing fees of $83.3 million, offset by
mortgage  servicing rights  amortization of $40.5 million.  HomeSide's  weighted
average  servicing  fee  during the  second  quarter  of fiscal  1997 was 0.367%
compared to 0.389% during the first quarter of fiscal 1997.  The decrease in the
weighted  average  servicing fee was due to the servicing  rights  acquired from
HHI. These servicing  rights generally had lower servicing fees due to the lower
proportion of government  loans in HHI's  servicing  portfolio.  Amortization of
mortgage  servicing  rights is recorded over the estimated  servicing  period in
proportion to estimated  servicing  revenue and increased  from $16.4 million in
the first  quarter of fiscal  1997 to $40.5  million  in the  second  quarter of
fiscal 1997 as a result of a higher average servicing portfolio.



<PAGE>


  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 loan and therefore,  the value of the servicing
portfolio declines as prepayments increase.

    During the period March 16, 1996 to November 30,  1996,  HomeSide  purchased
options on U.S.  Treasury bond futures to protect a  significant  portion of the
market value of its mortgage  servicing  portfolio from a decline in value.  The
option  contracts used by HomeSide have  characteristics  such that they tend to
increase in value as interest rates decline.  Conversely, these option contracts
tend to decline in value as interest rates rise.  Accordingly,  changes in value
of  these  securities  will  tend to move  inversely  with  changes  in value of
HomeSide's mortgage servicing rights.

    These option  contracts  are  designated  as hedges on the purchase date and
such  designation  must be at a level at least as specific as the level at which
mortgage servicing rights are evaluated for impairment. The option contracts are
marked-to-market  with changes in market value  deferred  and  recognized  as an
adjustment  to the cost of the  related  mortgage  servicing  right  asset being
hedged. As a result, any 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  option 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 the periods presented, HomeSide has
experienced  a high  measure  of  correlation  between  changes  in the value of
mortgage  servicing  rights and the  option  contracts.  However,  in periods of
rising interest rates,  the increase in value of mortgage  servicing  rights may
outpace  the  decline  in value of the  option  contracts  since the loss on the
options is limited to the premium paid.

    Since HomeSide's  inception,  cumulative gains and losses on risk management
contracts  resulted in a $60.2  million net gain which reduced the cost basis of
mortgage  servicing  rights at November  30, 1996.  Of the $60.2  million of net
gains included in the carrying  value of HomeSide's  mortgage  servicing  rights
portfolio,  $133.3 million of gains occurred  during the third quarter of fiscal
1997 and offset deferred  losses of $74.7 million  recorded during the first and
second quarters of fiscal 1997.  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 contracts at November 30, 1996 was $162.4
million,  which was equal to their  carrying  amount  because  the  options  are
marked-to-market   at  each  reporting  date.  See  "--  Liquidity  and  Capital
Resources"  for further  discussion of HomeSide's  sources and uses of cash. See
Note 3 of  Notes to  Consolidated  Financial  Statements  for a  description  of
HomeSide's accounting policy for its risk management contracts. See Notes 10 and
11 of Notes to  Consolidated  Financial  Statements  for  additional  fair value
disclosures with respect to HomeSide's risk management contracts.

  Net Interest Expense

    Net interest  expense was $1.7 million  during the second  quarter of fiscal
1997 compared to net interest  revenue of $2.9 million  during the third quarter
of fiscal 1997. Net interest revenue during the third quarter of fiscal 1997 was
comprised  of  interest  income of $25.2  million,  which was offset by interest
expense  of $22.3  million  on the  Company's  borrowings.  Interest  income and
expense  during the second  quarter of fiscal 1997 were $22.3  million and $23.9
million,  respectively. The increase in interest income during the third quarter
of fiscal 1997 was the result of an  increase  in the  average  balance of loans
held for sale from $1.3  billion  in the second  quarter of fiscal  1997 to $1.4
billion during the third quarter of fiscal 1997. Interest expense decreased from
$23.9 million in the second  quarter of fiscal 1997 to $22.3 million  during the
third quarter of fiscal 1997. Lower  short-term  interest rates and the improved
pricing  on  borrowings  under the Bank  Credit  Agreement  contributed  to this
reduction.

    Net interest expense decreased from $2.2 million during the first quarter of
fiscal 1997 to $1.7 million  during the second  quarter of fiscal 1997,  or 23%.
Net interest  expense during the second quarter was comprised of interest income
of $22.3  million and was exceeded by interest  expense of $23.9  million on the
Company's  borrowings.  Interest  income and expense during the first quarter of
fiscal 1997 were $12.7 million and $15.0 million, respectively. The increases in
interest income and interest expense during the second quarter are the result of
an  increase in the  average  balance of mortgage  loans held for sale from $770
million in the first  quarter of fiscal 1997 to $1.3  billion  during the second
quarter of fiscal 1997 and an increase in the average  balance of notes  payable
to banks from $1.3 billion to $2.0 billion, from the first quarter to the second
quarter of fiscal 1997,  respectively.  HomeSide's acquisition of HHI on May 31,
1996 generally  contributed to the increased balances of mortgage loans held for
sale  and  borrowings.  Interest  income  during  the  second  quarter  was also
positively affected by a general increase in long-term interest rates during the
second  quarter.  Interest  expense during the second quarter also included $5.7
million of interest  incurred on the $200.0  million  principal  amount of Notes
issued on May 15, 1996.  Interest  expense on the Notes during the first quarter
of fiscal 1997 was $2.3 million.  First quarter  interest  expense also included
interest on $90.0 million of bridge financing,  which was outstanding from March
16, 1996 to May 15, 1996 and incurred  interest at 9.25%.  The bridge  financing
was paid off with a portion of the proceeds from the Notes.  The Company intends
to use a  portion  of the  proceeds  of the  Offering  (see  Note 13 of Notes to
Consolidated  Financial  Statements) to retire $70.0 million principal amount of
the Notes. See "Use of Proceeds."



<PAGE>


  Net Mortgage Origination Revenue

    Net mortgage  origination revenue was $16.5 million during the third quarter
of fiscal 1997  compared to $16.3  million  during the second  quarter of fiscal
1997, a $0.2 million increase.  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 hedges of secondary marketing activity
and fees  charged  to  correspondents  for the  review  of loan  documents.  Net
mortgage  origination revenue also includes gains from excess mortgage servicing
receivables.  As noted  above,  loan  production,  exclusive  of bulk  servicing
acquisitions,  was $5.5 billion for the third  quarter of fiscal 1997,  slightly
higher than the second  quarter of fiscal 1997 loan  production,  excluding bulk
acquisitions.  HomeSide's primary  origination  activities during the second and
third  quarters of fiscal 1997 took place  through  correspondent  and  co-issue
channels.  Currently,  HomeSide  expects  these  channels  to continue to be the
primary loan origination sources in the future.

    Net mortgage origination revenue was $16.3 million during the second quarter
of fiscal 1997  compared  to $10.8  million  during the first  quarter of fiscal
1997,  a 51%  increase.  As noted  above,  loan  production,  exclusive  of bulk
servicing acquisitions,  was $5.5 billion for the second quarter of fiscal 1997,
$1.7  billion,  or 45% higher than the first fiscal  quarter loan  production of
$3.8 billion.  The increase in loan  production is reflective of the  production
from the preferred seller  relationship  with HHI established as part of the HHI
Acquisition.  HomeSide's  primary  origination  activities  during the first and
second quarters of fiscal 1997 were through correspondent and co-issue channels.
HomeSide  expects these channels to continue to be the primary loan  origination
sources in the future.

  Salaries and Employee Benefits

    Salaries and employee benefits expense decreased $0.5 million, or 2.5%, from
$21.2 million in the second  quarter of fiscal 1997 to $20.7 million  during the
third quarter of fiscal 1997. The decrease was due to the continuing integration
of the Barnett servicing operations.  The average number of full time equivalent
employees  fell from 1,879  during the  second  quarter of fiscal  1997 to 1,708
during the third quarter of fiscal 1997.

    Salaries and employee benefits expense increased $9.7 million,  or 84%, from
$11.5 million in the first  quarter of fiscal 1997 to $21.2  million  during the
second  quarter of fiscal 1997.  The increase was due to growth in the number of
employees as a result of the  acquisition  of HHI on May 31,  1996.  The average
number of full  time  equivalent  employees  grew from  1,096  during  the first
quarter of fiscal 1997 to 1,879 during the second quarter of fiscal 1997.



<PAGE>


  Occupancy and Equipment Expense

    Occupancy and  equipment  expense  increased  $0.2 million from $3.1 million
during  the  second  quarter  of fiscal  1997 to $3.3  million  during the third
quarter of fiscal 1997.  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  increased $1.3 million,  or 67%, from $1.8
million  during the first quarter to $3.1 million  during the second  quarter of
fiscal 1997. The increase in occupancy and equipment  expense was due to certain
premises and equipment  acquired from HHI and increases in  information  systems
required to handle the growing mortgage servicing portfolio.

  Servicing Losses on Investor-Owned Loans

    Servicing losses on investor-owned loans increased from $4.1 million for the
second  quarter of fiscal 1997 to $5.0  million for the third  quarter of fiscal
1997,  a 22%  increase.  Servicing  losses  on  investor-owned  loans  primarily
represent  anticipated  losses  primarily  attributable  to servicing FHA and VA
loans for investors.  These amounts include actual losses for final  disposition
of loans,  accrued interest for which payment has been denied, and estimates for
potential  losses based on  HomeSide's  experience  as a servicer of  government
loans.

    Servicing  losses  on  investor-owned  loans  increased  slightly  from $3.9
million  for the first  quarter of fiscal  1997 to $4.1  million  for the second
quarter of fiscal 1997, a 3% increase.

    Included  in the balance of accounts  payable  and  accrued  liabilities  at
November 30, 1996 is a reserve for estimated  servicing losses on investor-owned
loans of $21.6 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.

  Other Expense

    Other  expense  decreased  $0.8  million  from $12.5  million for the second
quarter of fiscal 1997 to $11.7 million during the third quarter of fiscal 1997.
Other expense  consists mainly of  professional  fees,  communications  expense,
advertising  and public  relations and certain loan  origination  expenses.  The
level of other expense will fluctuate in part based upon the level of HomeSide's
mortgage  servicing  portfolio and loan production  volumes.  Future  production
levels are dependent on the level of long-term interest rates and other economic
factors, which are difficult to accurately predict.

    Other expense increased $7.2 million from $5.3 million for the first quarter
of fiscal 1997 to $12.5 million during the second quarter of fiscal 1997.

  Provision for Income Taxes

    HomeSide's  provision  for income  taxes was $9.0  million  during the third
quarter of fiscal  1997,  an  increase  of $2.0  million  over the $7.0  million
provision  recorded  during the second quarter of fiscal 1997. The provision for
income taxes for the period March 16, 1996 to May 31, 1996 was $4.6 million. The
effective  income tax rates for the first,  second and third  quarters of fiscal
1997 was approximately 41%.

Liquidity and Capital Resources

  Operations

    Net cash used in operations was $181.8 million for the period March 16, 1996
to November 30, 1996.  The primary uses of cash in operations  were to fund loan
originations  and pay  corporate  expenses.  These  uses of cash were  partially
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.  Decreases in
long-term  interest rates generally result in higher loan  refinancing  activity
which results in higher cash demands to meet increased loan  production  levels.
Cash needs in times of increased production are primarily met through borrowings
and loan sales.

  Investing

    Net cash used in investing  activities  was $675.7 million during the period
March 16, 1996 to November  30,  1996.  Cash used in  investing  activities  was
primarily used for the purchase and origination of mortgage servicing rights and
the purchase of options on U.S.  Treasury  bond futures as part of the Company's
hedging program. During the period March 16, 1996 to November 30, 1996, HomeSide
also used cash of $133.4 million and $106.2 million to purchase certain mortgage
banking  operations  of HLI  and  HHI,  respectively  (see  Note 4 of  Notes  to
Consolidated Financial Statements). Future uses of cash for investing activities
will be dependent on the mortgage  origination  market and the Company'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.



<PAGE>


  Financing

    During the period March 16, 1996 to November  30, 1996,  HomeSide had $858.7
million of net cash  provided by financing  activities.  The primary  sources of
cash from  financing  activities  during the period were $152.8 million from the
issuance of common  stock of HomeSide,  the issuance of $200.0  million of Notes
and increases in the Company's line of credit borrowings. Cash used in financing
activities was used to repay a $90.0 million bridge loan and the payment of debt
issue costs related to the Notes and the Bank Credit Agreement.

    The bridge  financing  was used to finance a portion of the HLI  Acquisition
and was repaid  with a portion of the  proceeds  from the Notes.  The Notes were
issued on May 14, 1996, pay interest  semiannually at 11.25% and are due May 15,
2003.  Proceeds of $87.5  million were held in escrow until the close of the HHI
Acquisition  and an additional $6.5 million were used to pay  underwriting  fees
and expenses. During the third quarter of fiscal 1997, the Notes were registered
under the  Securities  Act. The holders have  exchanged  unregistered  Notes for
registered  Notes.  The  registered  Notes are  identical in all respects to the
terms of the unregistered Notes, except that the registered Notes will generally
be freely  transferable  by the holders  thereof.  The registered  Notes will be
recorded at the carrying value of the  unregistered  Notes that were  exchanged.
The proceeds from common stock issuances were received upon the close of the HLI
Acquisition  on March 15,  1996.  Additional  proceeds  were  received  upon the
issuance of stock as part of the HHI Acquisition on May 31, 1996. For additional
information  regarding the Notes and the issuance of common  stock,  see Notes 6
and 7 of Notes to Consolidated Financial Statements.

    Cash from financing  activities  was also provided by the three-year  senior
secured revolving credit facility that was entered into by certain of HomeSide's
subsidiaries  on  March  15,  1996  and  re-issued  as part of the  Bank  Credit
Agreement on May 31, 1996. The line of credit is subject to a $2.5 billion limit
and is secured by  primarily  all of the assets of  HomeSide.  The $2.5  billion
commitment is comprised of a servicing  secured credit facility,  capped at $950
million, and a warehouse loan commitment. Drawings under the 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) a  eurodollar  rate.  Cash  provided by the
Company's line of credit facility is the result of borrowings  needed to finance
loan origination activity. In periods of higher loan origination activity,  cash
needs are  greater  and,  accordingly,  HomeSide  must  borrow  under the credit
facility in order to meet production  demand. In periods of reduced loan demand,
proceeds from loan sales can be used to pay down the credit facility.  In future
periods,  it is expected that cash  financing  needs will  primarily be met from
drawings  on the credit  facility  as opposed to further  issuances  of notes or
common stock.



<PAGE>


    HomeSide does not expect to pay dividends for the  foreseeable  future.  The
ability of HomeSide to pay dividends is restricted by covenants in the indenture
governing the Notes.  See  "Description of the Notes." The ability of HomeSide's
subsidiaries  to pay dividends to HomeSide is restricted by covenants  contained
in the Bank Credit Agreement.

    During the period  March 16, 1996 to  November  30,  1996,  net cash used in
operations  and  investing  activities  was $181.8  million and $675.7  million,
respectively,  while cash provided by financing  activities was $858.7  million,
resulting in a net increase in cash of $1.2  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.
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  servicing rights  portfolio  provides a potential source of funds to
meet liquidity requirements, especially in periods of rising interest rates when
loan origination volume slows.  Future cash needs are highly dependent on future
loan  production  and  servicing  results,  which are  influenced  by changes in
long-term interest rates.

  New Accounting Standard

    In June 1996,  the Financial  Accounting  Standards  Board  ("FASB")  issued
Statement of Financial  Accounting  Standards No. 125, "Accounting for Transfers
and Servicing of Financial  Assets and  Extinguishments  of Liabilities"  ("SFAS
125").  This Statement,  among other things,  provides  accounting and reporting
standards for transfers and servicing of financial assets and extinguishments of
liabilities.  SFAS 125 requires  that after a transfer of financial  assets,  an
entity  recognize  the  financial  and  servicing  assets  it  controls  and the
liabilities it has incurred, derecognizes financial assets when control has been
surrendered,  and  derecognizes  liabilities  when  extinguished.  SFAS 125 also
requires that liabilities and derivatives incurred or obtained by transferors as
part of a transfer of financial assets be initially measured at fair value. This
Statement is  effective  for  transfers  and  servicing of financial  assets and
extinguishment  of  liabilities  occurring  after December 31, 1996 and is to be
applied  prospectively.  Management expects that the impact of this Statement on
the results of operations, financial condition, or liquidity of HomeSide will be
immaterial.




<PAGE>


PART II.  OTHER INFORMATION

Item 1.  Legal Proceedings

    HomeSide,  along with its subsidiaries,  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.  For  additional  information,  see  Note  12 of  Notes  to
Consolidated Financial Statements in Item 1. Financial Statements of Part I.
Financial Information.

Item 5.  Other Information

    During the period ended  November 30, 1996,  HomeSide  filed a Form S-4 with
the Securities and Exchange  Commission to register notes (Exchange Notes), with
terms  identical to the private  placement notes discussed in Note 6 of Notes to
Consolidated  Financial Statements in Item 1. Financial Statements under Part I.
Financial Information.,  under the Securities Act of 1933. The Form S-4 covering
the  Exchange  Notes was  declared  effective  by the  Securities  and  Exchange
Commission in October 1996. The private  placement  notes were exchanged for the
Exchange Notes at the conclusion of the exchange period on December 9, 1996.

    In December 1996, HomeSide filed a Form S-1 with the Securities and Exchange
Commission  to register  7,350,000  shares of common  stock for  issuance to the
public.  A portion of the  proceeds  from the  offering is to be used to repay a
portion of HomeSide's $200 million of senior secured second priority notes.  The
remainder  of the  proceeds is to be used for general  corporate  purposes.  The
issuance is expected to occur during the fourth fiscal quarter of 1997. See Note
13 of  Notes  to  Consolidated  Financial  Statements  under  Part I.  Financial
Information.


Item 6.  Exhibits and Reports on Form 8-K

(a)      Exhibits.

         27       Financial Data Schedule



<PAGE>



                                   SIGNATURES

    Pursuant to the requirements of the Securities and 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 14, 1997                     /s/ Kevin D. Race
                                            -------------------
                                            Kevin D. Race
                                            Vice President, Chief Financial
                                               Officer and Treasurer (Principal
                                               Financial and Accounting Officer)