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

                                   FORM 10-Q/A

(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 December 31, 2000

                                       OR

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

                           Commission File No. 1-12655

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



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

           Class                                Outstanding at December 6, 2001
           -----                                --------------------------------

Common stock $0.01 par value                           1.724 Shares
Class C non-voting common stock $1.00 par value            none




<PAGE>
<TABLE>


                          HOMESIDE INTERNATIONAL, INC.
                                   FORM10-Q/A
                    Quarterly Period Ended December 31, 2000

                                      INDEX


                                                                                                                            Page No.
                                                                                                                            --------
PART I.  FINANCIAL INFORMATION
<S>                                                                                                                            <C>
ITEM 1.           Financial Statements (unaudited)  (Note A):

                  Consolidated Balance Sheets as of December 31, 2000 and September 30, 2000................................   3

                  Consolidated Statements of Income and Comprehensive Income for the Three Months Ended
                           December 31, 2000 and December 31, 1999..........................................................   4

                  Consolidated Statements of Cash Flows for the Three Months Ended December 31, 2000 and
                           December 31, 1999................................................................................   5

                  Notes to Consolidated Financial Statements................................................................   6

ITEM 2.           Management's Discussion and Analysis of Financial Condition and Results of Operations.....................   14


PART II.  OTHER INFORMATION

Item 1.           Legal Proceedings.........................................................................................   23

Item 6.           Exhibits and Reports on Form 8-K..........................................................................   23


SIGNATURES..................................................................................................................   24

</TABLE>


Note A

As  discussed in Note 2 of the  consolidated  financial  statements  of HomeSide
International,  Inc. (the "Company")  included herein,  the Company announced on
September 4, 2001 the discovery of an incorrect  interest rate assumption in the
mortgage  servicing  rights model.  As a result,  the Company has determined the
necessity to restate certain previously  reported interim financial  statements.
The  restatement,  as presented  herein,  corrects the effects of the  incorrect
interest rate assumption on the  consolidated  financial  statements and related
notes for the quarterly period ended December 31, 2000.


                                       2
<PAGE>
<TABLE>


                              FINANCIAL INFORMATION

ITEM 1.  Financial Statements


                          HOMESIDE INTERNATIONAL, INC.
                           CONSOLIDATED BALANCE SHEETS
                                   (Unaudited)
                    (Dollars in Thousands, Except Share Data)

                                                                                         December 31, 2000       September 30, 2000
                                                                                               (Restated)
                                                                                       ----------------------   --------------------
ASSETS

<S>                                                                                         <C>                     <C>
Cash and cash equivalents                                                                   $    59,022             $   110,737
Mortgage loans held for sale, net                                                             1,329,690               1,441,216
Mortgage servicing rights, net                                                                4,156,574               4,464,312
Risk management instruments at fair value                                                       280,907                       -
Early pool buyout advances                                                                      126,657                 141,255
Accounts receivable, net                                                                        333,346                 324,028
Premises and equipment, net                                                                      82,276                  80,052
Goodwill, net                                                                                   603,233                 612,018
Other assets                                                                                     85,874                  93,415
                                                                                            -----------             -----------

Total Assets                                                                                $ 7,057,579             $ 7,267,033
                                                                                            ===========             ===========

LIABILITIES AND STOCKHOLDER'S EQUITY

Accounts payable and accrued liabilities                                                    $   680,068             $   587,275
Notes payable                                                                                 2,939,000               3,235,400
Long-term debt                                                                                2,161,371               1,899,772
Deferred income taxes, net                                                                      185,688                 271,369
                                                                                            -----------             -----------

Total Liabilities                                                                             5,966,127               5,993,816
                                                                                            -----------             -----------

Stockholder's Equity:
Common stock:
     Class A Common stock, $.01 par value, 100 shares authorized and 1 share
      issued and outstanding                                                                          -                       -
     Class C non-voting common stock, $1.00 par value, 195,000 shares
         authorized, and 0 shares issued and outstanding                                              -                       -
Additional paid-in capital                                                                    1,231,302               1,231,302
(Accumulated deficit) Retained earnings                                                        (136,884)                 41,915
Accumulated other comprehensive income                                                           (2,966)                      -
                                                                                            -----------             -----------

Total Stockholder's Equity                                                                    1,091,452               1,273,217
                                                                                            -----------             -----------

Total Liabilities and Stockholder's Equity                                                  $ 7,057,579             $ 7,267,033
                                                                                            ===========             ===========

   The accompanying notes are an integral part of these financial statements.
</TABLE>

                                       3
<PAGE>
<TABLE>


                          HOMESIDE INTERNATIONAL, INC.
           CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
                                   (UNAUDITED)
                             (Dollars in Thousands)



                                                                                           For the Three          For the Three
                                                                                           Months Ended           Months Ended
                                                                                         December 31, 2000      December 31, 1999
                                                                                            (Restated)
                                                                                         ------------------    --------------------

REVENUES:

<S>                                                                                           <C>                    <C>
Mortgage servicing fees                                                                       $ 208,198              $ 171,198
Amortization of mortgage servicing rights                                                      (120,262)               (97,528)
Valuation provision of mortgage servicing rights                                               (624,861)                     -
Risk management of mortgage servicing rights                                                    365,472                      -
                                                                                              ---------              ---------
    Net servicing (expense) revenue                                                            (171,453)                73,670


Interest income                                                                                  28,684                 36,165
Interest expense                                                                                (47,881)               (35,572)
                                                                                              ---------              ---------
    Net interest (expense) revenue                                                              (19,197)                   593

Net mortgage origination revenue                                                                 22,623                 17,008
Other income                                                                                      5,803                    863
                                                                                              ---------              ---------
    Total (Expenses) Revenues                                                                  (162,224)                92,134

EXPENSES:

Salaries and employee benefits                                                                   29,879                 29,818
Occupancy and equipment                                                                           9,838                  8,550
Servicing losses on investor-owned loans
   and foreclosure-related expenses                                                              10,091                  8,368
Goodwill amortization                                                                             8,785                  9,010
Other expenses                                                                                   19,357                 13,325
                                                                                              ---------              ---------
    Total Expenses                                                                               77,950                 69,071

(Loss) income before income taxes and cumulative effect of a
change in accounting principle                                                                 (240,174)                23,063
Income tax (benefit) expense                                                                    (84,493)                 4,893
                                                                                              ---------              ---------

(Loss) income before cumulative effect of a change in accounting
principle                                                                                      (155,681)                18,170
                                                                                              ---------              ---------

Cumulative effect of a change in accounting for derivative
instruments and hedging activities, net of income tax expense of
$507                                                                                                883                      -
                                                                                              ---------              ---------

Net (loss) income                                                                              (154,798)                18,170
                                                                                              ---------              ---------
Other comprehensive income, net of tax:
     Cumulative effect of a change in accounting for derivative
     instruments and hedging activities                                                          (9,133)                     -
     Net losses on current period cash flow hedges                                               (2,915)                     -
      Less: reclassification adjustment for losses included in net
      income                                                                                      9,082                      -
                                                                                              ---------              ---------
Other comprehensive (loss) income                                                                (2,966)                     -
                                                                                              ---------              ---------

Comprehensive (loss) income                                                                   $(157,764)             $  18,170
                                                                                              =========              =========

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

</TABLE>


                                       4
<PAGE>
<TABLE>

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

                             (Dollars in Thousands)

                                                                                       For the Three          For the Three
                                                                                        Months Ended           Months Ended
                                                                                     December 31, 2000      December 31, 1999
                                                                                         (Restated)
                                                                                    -------------------   ---------------------
CASH FLOWS  PROVIDED BY OPERATING ACTIVITIES:

<S>                                                                                      <C>                   <C>
Net (loss) income                                                                        $(154,798)            $  18,170
Adjustments to reconcile net (loss) income to net cash provided  by
      Operating activities:
  Amortization of mortgage servicing rights                                                120,262                97,528
  Depreciation and amortization                                                             12,272                11,483
  Cumulative effect of a change in accounting for derivative instruments
  and hedging activities, net                                                                 (883)                    -
  Change in fair value of net hedged assets                                                   (152)                    -
  Risk management of mortgage servicing rights                                            (365,472)                    -
  Valuation provision of mortgage servicing rights                                         624,861                     -
  Servicing losses on investor-owned loans                                                   3,560                 2,530
  Change in deferred income tax liability                                                  (84,484)                4,897
  Origination, purchase and sale of loans held for sale, net of repayments                 125,026               112,334
  Change in accounts receivable                                                            (13,122)              (35,769)
  Change in other assets and accounts payable and accrued liabilities                      136,682                (8,639)
                                                                                         ---------             ---------
Net cash provided by operating activities                                                  403,752               202,534

CASH FLOWS USED IN INVESTING ACTIVITIES:

Purchase of premises and equipment, net                                                     (6,082)               (6,251)
Acquisition of mortgage servicing rights                                                  (437,385)             (234,919)
Net cash provided from (used for) risk management contracts                                 45,605              (138,807)
Net early pool buyout reimbursements                                                        14,410                94,996
                                                                                         ---------             ---------
Net cash used in investing activities                                                     (383,452)             (284,981)

CASH FLOWS (USED IN) PROVIDED BY FINANCING ACTIVITIES:

Net (repayments to) borrowings from banks                                                  (61,400)              494,599
Issuance of commercial paper, net of repayments                                           (235,000)               17,354
Issuance of medium-term notes                                                              250,000                     -
Payment of debt issue costs                                                                 (1,536)               (2,123)
Repayment of long-term debt                                                                    (79)                 (221)
Dividends paid to the Parent                                                               (24,000)              (24,000)
                                                                                         ---------             ---------
Net cash (used in) provided by financing activities                                        (72,015)              485,609

Net (decrease) increase in cash and cash equivalents                                       (51,715)              403,162
Cash and cash equivalents at beginning of period                                           110,737               202,859
                                                                                         ---------             ---------

Cash and cash equivalents at end of period                                               $  59,022             $ 606,021
                                                                                         =========             =========

Supplemental disclosure of cash flow information:
Interest paid                                                                            $  50,818             $  38,699
Income taxes paid                                                                        $       2             $       3
Income taxes refunded                                                                    $      14             $       7
Impact of cash flow hedges on other comprehensive income, net                            $   2,966             $       -


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

</TABLE>


                                       5
<PAGE>

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

1.       BASIS OF PRESENTATION

The  accompanying  consolidated  financial  statements  have  been  prepared  in
accordance with generally accepted  accounting  principles for interim financial
information and with the  instructions to Form 10-Q and Rule 10-01 of Regulation
S-X.  Accordingly,  they do not include  all of the  information  and  footnotes
required by generally  accepted  accounting  principles  for complete  financial
statements. In the opinion of management,  all adjustments (consisting of normal
recurring  adjustments)  considered  necessary for a fair presentation have been
included.

Operating  results for the  three-months  ended  December 31, 2000 and the three
months ended  December 31, 1999 are not  necessarily  indicative  of the results
that may be expected for the fiscal year ending  September 30, 2001. For further
information,  refer  to the  consolidated  financial  statements  and  footnotes
thereto  included in the Form 10-K for the fiscal year ended  September 30, 2000
of HomeSide International, Inc. (the "Company"). See also Note A to the Index to
the Form 10-Q/A above.


2.       RESTATEMENT

As announced on September 4, 2001, the Company  discovered an incorrect interest
rate assumption in the mortgage  servicing rights ("MSR")  valuation model which
caused  the  model to under  estimate  the MSR's  sensitivity  to  movements  in
interest rates,  particularly in a falling rate environment.  During the quarter
ended  December 31, 2000,  mortgage rates declined by 58 basis points from 7.88%
at September  30, 2000 to 7.30% at December 31, 2000 with  substantially  all of
the rate movement occurring in the second half of the quarter. Had the valuation
model  included  the  correct  interest  rate  assumption,  the model would have
estimated  faster loan prepayment  speeds and, as a result, a lower valuation of
the mortgage servicing rights asset.

The correction of the incorrect  interest rate assumption  caused the Company to
determine that the inception  documentation  required to apply hedge  accounting
pursuant to Financial  Accounting  Standards No. 133, "Accounting for Derivative
and  Hedging   Activities"  (  "SFAS  133"),   was  inadequate  to  support  the
characteristics  of the hedged item and its  exposure to changes in hedged risk.
Therefore,  the Company  concluded that the application of hedge  accounting was
inappropriate for those derivative  instruments previously designed to hedge the
exposure to changes in the fair value of the mortgage servicing rights assets.

The Company  recognized a gain of $370.4 million to current  earnings related to
the  change  in fair  value of these  derivatives  for the  three  months  ended
December 31, 2000 with no  corresponding  hedge offset relative to the change in
the fair value of the mortgage servicing rights asset. Consequently, the Company
reversed a previously  recorded change in value of the mortgage servicing rights
due to hedged risk of $347.9  million to current  earnings  for the three months
ended  December 31,  2000.  Pursuant to the guidance  provided  under  Financial
Accounting  Standards  No. 140,  "Accounting  for  Transfers  and  Servicing  of
Financial Assets and  Extinguishments of Liabilities"  ("SFAS 140"), the Company
subsequently performed an impairment evaluation of the mortgage servicing rights
and recognized an additional  valuation  provision of $614.4 million to earnings
for the three months ended  December 31,  2000.  Accordingly,  the  consolidated
statement of income for the three months ended  December 31, 2000,  as restated,
reflects a pretax net reduction in net servicing  (expenses) revenues and pretax
income of ($266.5) million and a related tax (benefit) of ($97.3) million, for a
net reduction in previously reported earnings of $169.2 million.







                                       6
<PAGE>

The impact of the correction to the basis of the mortgage  servicing  rights for
the three months ended December 31, 2000, as set forth herein, is as follows:
<TABLE>

Mortgage Servicing Rights Restatement
For the Three Months Ended December 31, 2000
(Dollars in millions)

                                                        Mortgage servicing    Restatement adjustments     Restated mortgage
                                                            rights as          to mortgage servicing      servicing rights
                                                       originally reported             rights
                                                       --------------------------------------------------------------------
<S>                                                        <C>                    <C>                       <C>
Beginning Balance at September 30, 2000                    $  4,464.3             $      -                  $    4,464.3
Additions                                                       437.4                    -                         437.4
Change in value due to hedged risk                             (347.9)               347.9                             -
Amortization                                                   (120.3)                   -                        (120.3)
Valuation provision                                             (10.5)              (614.4)                       (624.9)
                                                       --------------------------------------------------------------------

Ending Balance at December 31, 2000                        $  4,423.0             $ (266.5)                 $    4,156.5
                                                       ====================================================================

</TABLE>


3.       CASH AND CASH EQUIVALENTS

Cash  and  cash   equivalents   include   cash  and  cash  due  from  banks  and
interest-bearing  deposits  with an original  maturity of three  months or less.
Margin  deposits  associated  with  the risk  management  program  for  mortgage
servicing  rights  are  maintained  with   counterparties  and  the  Company  in
accordance with the requirements of  International  Swap Dealer  Agreements.  At
December  31,  2000,  counterparty   margin   deposits  with  the  Company  were
approximately  $156.3  million.  At September  30, 2000,  the  Company's  margin
deposits with counterparties totaled approximately $84.0 million.


4.       MORTGAGE SERVICING RIGHTS (Restated)

The  change in the  balance of  mortgage  servicing  rights  was as follows  (in
thousands):

Balance, September 30, 2000                    $4,464,312
Additions                                         437,385
Amortization                                     (120,262)
Valuation provision                              (624,861)
                                          -----------------

Balance, December 31, 2000                     $4,156,574
                                          =================



5.       RISK  MANAGEMENT  AND THE ACCOUNTING  FOR  DERIVATIVE  INSTRUMENTS  AND
         HEDGING ACTIVITIES (Restated)

The Company has developed  risk  management  programs and processes  designed to
manage market risk associated with the Company's  business  activities.  As more
fully described  herein,  interest rate risk is a predominant  risk that further
influences a number of other  business  risks such as pricing  risk,  prepayment
risk,  valuation risk, balance sheet management and funding risk. As part of its
risk  management   programs,   the  Company  utilizes  a  number  of  derivative
instruments to manage these risks.

In June of 1998, the Financial  Accounting  Standards Board issued  Statement of
Financial Accounting  Standards No. 133, "Accounting for Derivative  Instruments
and Hedging  Activities"  (SFAS 133).  SFAS 133,  as amended,  standardizes  the
accounting for derivative  instruments and hedging  activities and requires that
all  derivative  instruments  be  recognized as assets and  liabilities  at fair
value. If certain  conditions are met, "hedge accounting" may be applied and the
derivative  instruments  may be  specifically  designated as: (a) a hedge of the
exposure to changes in the fair value of a  recognized  asset or liability or an
unrecognized firm commitment  ("fair value hedge"),  (b) a hedge of the exposure
to  variability  of cash flows of a recognized  asset,  liability or  forecasted
transaction  ("cash  flow  hedge")  or (c) a hedge of certain  foreign  currency
exposures. In the case of a qualifying fair value hedge, changes in the value of
the  derivative  instruments  that have been highly  effective are recognized in


                                       7
<PAGE>

current earnings along with the change in value of the designated hedge item. In
the case of a qualifying cash flow hedge, changes in the value of the derivative
instruments   that  have  been  highly   effective   are   recognized  in  other
comprehensive income ("OCI"),  until such time that earnings are affected by the
variability  of the cash flows of the  underlying  hedged item. In either a fair
value hedge or a cash flow hedge,  net  earnings  are impacted to the extent the
changes in the value of the derivative  instruments do not perfectly  offset the
changes  in  the  value  of  the  hedge  items  (so  called  "ineffectiveness").
Derivative instruments that are non-designated or do not meet the relevant hedge
accounting  criteria  are  accounted  for at fair  value  with  gains and losses
recorded to current earnings. The Company is not a party to any foreign currency
hedge relationships.

Effective with its first fiscal quarter  beginning  October 1, 2000, the Company
adopted  SFAS 133 as  required.  Accordingly,  all  derivative  instruments  are
recognized  on balance  sheet at fair value and are  either  designated  as fair
value hedges, cash flow hedges, or are non-designated  pursuant to the Company's
risk  management  policies.  At  October  1,  2000,  the  Company  recognized  a
cumulative-effect  transition  adjustment  of $1.4  million to increase  pre-tax
income for the effect of the change in accounting principle.  Additionally,  the
Company recognized a pre-tax  cumulative-effect  transition adjustment to reduce
OCI by $14.4 million. The transition adjustments are more fully explained in the
following  sections  along  with  the  risk  management   activities  and  hedge
accounting results for the quarter ended December 31, 2000.

Risk Management of Loan Production Activities

Loan  production  activities  include the origination or acquisition of mortgage
loans, the warehousing of those loans in inventory and the resale of those loans
to investors in the  secondary  mortgage  market.  The Company  maintains a risk
management  program to protect and manage  interest  rate risk and pricing  risk
associated  with its mortgage  committed  pipeline and mortgage  inventory.  The
Company does not presently originate or acquire loans for investment (portfolio)
purposes.

Mortgage Pipeline:

The  Company's   mortgage   committed   pipeline  includes  interest  rate  lock
commitments  ("IRLCs") that have been extended to borrowers who have applied for
loan funding and meet certain defined credit and underwriting  criteria.  All of
the  Company's  IRLCs will be  classified  as held for sale upon  funding of the
underlying loan. Effective with the adoption of SFAS 133, the Company classifies
and accounts for IRLCs as non-designated  derivative  instruments.  Accordingly,
IRLCs are  recorded  at fair value with  changes  in value  recorded  to current
earnings.  Risk management  derivative  contracts used to economically hedge the
IRLCs are also classified and accounted for as  non-designated  derivatives.  In
summary,   since  a  derivative   instrument  cannot  hedge  another  derivative
instrument (for accounting  purposes) the pipeline is effectively  accounted for
as a mark-to-market book of business.

The fair value of the Company's  IRLCs generally  approximate  zero at inception
(the lock-in date) since the Company's practice is to extend loan commitments at
market  rates of interest  and to exclude  from its fair value  calculation  the
normal profit margin associated with the future loan execution.  The future loan
execution  involves the sale of the loan and,  typically,  the  retention of the
servicing rights.  IRLCs have value  characteristics that are somewhat analogous
to certain  option  contracts in that the  commitments  tend to: (i) decrease in
value at an accelerating  rate as interest rates increase and the probability of
the  borrower's  loan  closing  increases,  and  (ii)  increase  in  value  at a
decelerating  rate  as  interest  rates  decline  and  the  probability  of  the
borrower's  loan closing  decreases.  The Company  manages the interest rate and
pricing  risks  associated  with  its  IRLCs  using  mortgage  forward  delivery
contracts,   options  on   mortgage-backed   securities  and  certain   treasury
instruments.  The Company's risk management program employs the use of financial
modeling to maintain a high degree of economic  correlation  between the changes
in values of the IRLCs and the related  non-designated  hedges.  However, due to
imprecisions  in  projecting  the  timing and rate of loan  closings  (which are
influenced by borrower behavior),  some level of economic ineffectiveness can be
expected.  Following  is a  summary  of the net  ineffectiveness  recognized  on
non-designated risk management hedging  relationships related to the pipeline at
December 31, 2000 (in thousands):

Gains on IRLCs recognized to income                                    $ 17,692

Losses on mortgage forward delivery contracts                           (13,818)
Losses on options contracts                                              (1,546)
                                                                       --------
   Total losses recognized to income                                    (15,364)

Net ineffectiveness recognized on non-designated derivatives           $  2,328
                                                                       ========

Gains on interest rate lock commitments  represent increases in the value of the
commitments  from the  rate-lock  inception  date to the loan  funding date (for
those  commitments that are funded),  or to the current reporting date for those
IRLCs that are open at  December  31,  2000.  The basis of the IRLCs at the loan
funding date,  representing cumulative gains or losses on the IRLCs, is included
as a  component  of the  initial  cost basis of the loans.  Approximately  $11.1


                                       8
<PAGE>

million of the gains  recognized on IRLCs  (reported  above) were applied to the
initial  basis of the  underlying  loans funded and are included in the carrying
amount of loans held for sale at  December  31,  2000.  The balance of the gains
totaling $6.6 million are  recognized as open  derivative  contracts at December
31, 2000 and are  recorded  at fair value in the  consolidated  balance  sheets.
During  the  quarter  ended  December  31,  2000,  net  gains  of  $7.0  million
attributable   to  pipeline   hedging   results  were  recognized  to  earnings.
Approximately  $4.7 million of the net gains relates to  transactions  that were
settled during the quarter while the balance of $2.3 million relates to the risk
management   relationships   presented   above.  The  net   ineffectiveness   of
non-designated  risk  management  relationships  (related  to the  pipeline)  is
included in net mortgage  origination  revenue in the accompanying  consolidated
statements of income.

Mortgage Inventory

The Company's  mortgage inventory includes closed loans that are held for resale
pending  completion  of  normal   post-closing   review,   collateral   document
preparation  and other pooling  requirements  necessary to  consummate  the sale
and/or  securitization.  Based  on the  status  of such,  as well as  historical
delivery patterns and investor settlement dates, the Company is able to forecast
the  amount  and  timing  of loan  sales.  Approximately  $1.21  billion  of the
Company's  loans at  December  31,  2000 are  conforming  loans  which have been
underwritten  pursuant to the requirements of the secondary  marketing  agencies
(FNMA,  FHLMC or GNMA as  appropriate).  The Company's risk  management  program
involves  the use of mortgage  forward  delivery  contracts to hedge 100% of its
agency-eligible conforming loans as forecasted loan sales. At December 31, 2000,
a total of $1.21 billion of mortgage forward delivery  contracts were designated
as cash flow  hedges.  At the  inception  of the  hedge,  the  Company  formally
documents  the  relationship  between the  forward  delivery  contracts  and the
forecasted loan sales as well as its risk management  objective and strategy for
undertaking the hedge  transactions.  The dollar amount of the forward  delivery
contracts  along  with the  underlying  rate  and  terms  of the  contracts  are
equivalent to the forecasted  loan sales that are probable of occurring.  Hence,
the forward  delivery  contracts  effectively  fix the  forward  sales price and
thereby  substantially  eliminate interest rate and pricing risk to the Company.
Cumulative losses related to the hedge instruments in the amount of $4.7 million
were recorded in OCI at December 31, 2000 and will be  reclassified  to earnings
during the next 90 days,  concurrent  with the  recognition  in  earnings of the
changes in cash flows of the forecasted  loans sales.  Pursuant to SFAS 133, the
unrealized gains  (representing the expected offset from the variability in cash
flows)  associated  with the  forecasted  loan  sales  are not  recorded  in the
consolidated  balance  sheet  at  December  31,  2000 but are  represented  as a
component  of the fair value of loans held for sale in excess of their  carrying
value.

Mortgage loans held for sale at December 31, 2000 include  non-conforming  loans
aggregating  $113 million which will be sold to non-agency,  private  investors.
During the three-month period ended December 31, 2000, losses of $0.4 million on
non-designated mortgage forward delivery contracts maintained as economic hedges
of  non-conforming  loans were  recorded  to  earnings  and are  included in net
mortgage  origination  revenue in the  accompanying  consolidated  statement  of
income.

The fair values of risk management  hedging  relationships  at December 31, 2000
are as follows (in thousands):

Mortgage Pipeline:
IRLCs at period end                                                 $     6,581
Non-designated mortgage forward delivery contracts                      (13,818)
Options on mortgage-backed securities                                       159
                                                                    -----------
   Total fair value of pipeline derivatives                              (7,078)

Mortgage Inventory:
Designated mortgage forward delivery contracts                           (4,670)
Non-designated mortgage forward delivery contracts                         (429)
                                                                    -----------
   Total fair value of derivatives related to inventory                  (5,099)

Net liability recorded for fair value of derivatives                $   (12,177)
                                                                    ===========

Carrying value of mortgage loans held for sale                      $ 1,329,690
Fair value of loans held for sale                                     1,342,361
                                                                    -----------
     Unrealized gains in mortgage inventory                         $    12,671
                                                                    ===========



                                       9
<PAGE>



Transition Adjustments and Current Period Activity in OCI

As discussed  above,  the  cumulative  effect of the adoption of SFAS 133 was to
increase  pre-tax net income by $1.4 million.  This amount relates solely to the
mortgage  pipeline  at  October  1, 2000 and  represents  the net  effect of the
adjustments necessary to record IRLCs and the related non-designated derivatives
at fair value.

The  pre-tax  cumulative-effect  transition  adjustment  to reduce  OCI by $14.4
million  relates solely to the hedging  activities of the mortgage  inventory at
October 1, 2000. Specifically,  this amount represents the cumulative losses (to
September 30, 2000) of mortgage forward delivery contracts that were off-balance
sheet prior to the adoption of SFAS 133. Such  cumulative  losses did not exceed
cumulative  unrealized gains in the designated  mortgage inventory at October 1,
2000.  Pursuant to the  requirements  of SFAS 133,  cumulative  losses in OCI of
$14.3 million were reclassified to earnings during the three-month  period ended
December 31, 2000,  concurrent  with the  recognition of the gains (or favorable
variability  in cash  flows) of the  related  forecasted  loan  sales  that were
settled.  Gains and  losses on such  hedge  relationships  are  included  in net
mortgage  origination  revenue in the  accompanying  consolidated  statement  of
income.  Activity in OCI related to cash flow hedges of forecasted loan sales is
summarized as follows for the quarter ended December 31, 2000 (in thousands):
<TABLE>

                                                                                                       Tax
                                                                                  Before-tax        (expense)        Net-of-tax
                                                                                    amount          or benefit         amount
                                                                                ---------------- ----------------- ----------------
<S>                                                                                <C>                  <C>              <C>
Balance at September 30, 2000                                                   $        -       $          -       $         -
Cumulative effect of a change in accounting for derivative instruments and
hedging activities                                                                 (14,383)             5,250            (9,133)
Reclassification of losses to net income                                            14,302             (5,220)            9,082
Net losses on current period cash flow hedges                                       (4,589)             1,674            (2,915)
                                                                                ---------------- ----------------- ----------------

Balance at December 31, 2000                                                    $   (4,670)      $      1,704       $    (2,966)
                                                                                ================ ================= ================
</TABLE>

Risk Management of Mortgage Servicing Rights

HomeSide utilizes a number of risk management  derivative  instruments to manage
the interest  rate risk  associated  with its mortgage  servicing  rights.  Such
instruments  include interest rate swaps,  swaptions and caps,  mortgage forward
delivery  contracts,  options on  mortgage-backed  securities,  and  options and
futures on exchange traded Treasury and Eurodollar  contracts.  Given the unique
value determinants and convexity of mortgage servicing rights, management uses a
combination  of derivative  instruments  to construct a hedge  portfolio that is
intended to provide effective  protection of the value of the Company's mortgage
servicing rights from interest rate risk.

Pursuant  to the  requirements  of  SFAS  133,  mortgage  servicing  rights  are
stratified  into  portfolios of similar assets based on their price  sensitivity
such that the mortgage  servicing rights in a given portfolio can be expected to
respond in a generally proportionate manner to the expected changes in the total
value of the designated  portfolio.  The Company uses vendor provided  valuation
models to determine the price  sensitivity of the mortgage  servicing rights for
selected rate shock scenarios such that individual portfolios can be established
and qualify for hedge  designation  (hereinafter  referred to as the "designated
portfolios").   Certain   mortgage   servicing   rights  with  dissimilar  value
determinants and unique convexity  profiles may fail to meet the Company's price
sensitivity  criteria and are excluded from the  portfolios  that are designated
for hedging (such  portfolios  are  hereinafter  referred to as  "non-designated
portfolios").

The Company employs statistical correlation techniques, both at the inception of
the hedge period and on an ongoing  basis,  to formally  assess its  expectation
that changes in the value of the derivative contracts are effectively correlated
to changes in the value of the hedged  asset or  liability.  Due to an incorrect
interest rate assumption in the mortgage  servicing  rights valuation model (see
Note 2), the Company  determined that the inception  documentation  required for
hedge  accounting  pursuant to SFAS 133 for the three months ended  December 31,
2000 was  inadequate to support the  characteristics  of the hedged item and its
exposure to changes in hedged risk.  Therefore,  the Company  concluded that the
application  of  hedge  accounting  was   inappropriate   for  those  derivative
instruments  previously  designed  to hedge the  exposure to changes in the fair
value of the mortgage  servicing rights assets. The Company recognized a gain of
$370.4 million to current  earnings related to the change in fair value of these
derivatives  for the three months ended December 31, 2000 with no  corresponding
hedge offset relative to the change in the fair value of the mortgage  servicing
rights asset. Consequently, the Company reversed a previously recorded change in
value of the mortgage  servicing  rights due to hedged risk of $347.9 million to
current  earnings for the three  months ended  December 31, 2000 and recorded an
additional  valuation  provision  of $614.4  million  related  to an  impairment
evaluation of mortgage servicing rights.



                                       10
<PAGE>

HomeSide's  risk  management  program  also  employs  the use of  non-designated
derivative contracts that are used to provide a level of economic offset against
the value changes  attributable  to the  non-designated  portfolios  that do not
qualify for hedge accounting treatment under SFAS 133. Additionally, the Company
is party to certain risk  management  strategies that are structured to mitigate
yield  curve  risk and to provide a level of  economic  offset to the time decay
(theta).  These non-designated  derivatives are marked-to-market with changes in
value  recorded to  earnings.  During the quarter  ended  December  31, 2000 the
company  recognized a gain of $25.5 million to current  earnings  related to the
change in fair value of these non-designated derivatives offset by a loss in the
amount of $30.4 million associated with excluded  components  relating to theta.
Additionally, the fair value of the Company's derivative instruments used in the
risk management of mortgage  servicing  rights is $279.9 million at December 31,
2000.

Risk Management of Corporate Funding

To meet its funding  requirements,  the Company  periodically issues fixed-rate,
medium-term  notes  which are  converted  to  floating-rate  debt as part of its
Corporate  funding  strategies.  As of the quarter ended  December 31, 2000, the
Company had $750 million of fixed-rate,  medium term notes that had been swapped
to floating rates of interest with $750 million in notional interest rate swaps.
The Company has  designated  the interest rate swaps as fair value hedges of the
change in value of the  medium-term  notes due to LIBOR interest  rates.  At the
inception of the hedge, the Company formally documents the hedging relationships
between  the  hedge  instruments  and the  hedged  items,  as  well as the  risk
management  objectives and strategy for undertaking the hedge transactions.  The
medium-term  notes are not  prepayable  and the key terms of the  interest  rate
swaps are equivalent to those of the medium-term notes. Accordingly, the Company
expects  that  changes in the value of the  interest  rate swaps will offset the
changes  in the value of the  fixed-rate  debt  attributable  to LIBOR  interest
rates.  During the quarter  ended  December 31, 2000,  the value of the interest
rate swap  contracts  increased  by $13.4  million and offset the changes in the
fair value of the  medium-term  notes due to the hedge  risk.  The fair value of
interest  rate swap  contracts  designated  as fair value hedges of  medium-term
notes is $13.2 million at December 31, 2000.

Termination of Hedging Relationships

The Company employs a number of risk management  monitoring procedures to ensure
that the designated hedging relationships are demonstrating, and are expected to
continue to  demonstrate,  a high level of  effectiveness.  Hedge  accounting is
discontinued  on a  prospective  basis  if it is  determined  that  the  hedging
relationship  is no longer  effective or expected to be effective in  offsetting
changes in the fair value or cash flows of the hedge  item,  or if a  forecasted
transaction  is no longer  probable  of  occurring.  When  hedge  accounting  is
discontinued,  the Company continues to carry the derivative instruments at fair
value with changes in their value recorded to earnings.  However, in the case of
a fair value hedge that is  discontinued,  the carrying amount of the previously
hedged asset or  liability  may not be adjusted for changes in their fair value,
except in the case  where a decline  in fair  value  creates  impairment  to the
Company. In the case of a cash flow hedge of a forecasted transaction that is no
longer probable of occurring,  gains and losses that were previously accumulated
in other comprehensive income are immediately recognized to earnings. During the
three months ended December 31, 2000, no hedging relationships were terminated.

Fair Value of Derivative Instruments

Derivative  Contracts:  The fair value of mortgage forward  delivery  contracts,
options on mortgage-backed securities and exchange traded futures and options on
Treasury  and  Eurodollar  contracts  are  determined  based on  market  quotes.
Interest  rate swaps,  swaptions  and caps are  determined  based on  discounted
valuation models and are periodically validated against dealer quotes.

Interest  Rate Lock  Commitments  Classified as  Derivatives:  The fair value of
interest rate lock commitments is determined  using a vendor provided  valuation
model which references market quotes of the underlying mortgages.  The valuation
model also  considers  a number of other key value  determinants  including  the
remaining  commitment  period, the rate of the commitment in relation to current
market rates,  interest rate volatility and the probability of the loan closing.
The   probability  of  the  loan  closing  is  estimated   based  on  historical
pull-through  rates which are stored in matrix detail within the model  database
by product type for an  established  set of interest rate shock  scenarios.  The
fair value of the Company's IRLCs generally  approximate  zero at inception (the
lock-in  date) since the  Company's  practice is to extend loan  commitments  at
market  rates of interest  and to exclude  from its fair value  calculation  the
normal profit margin associated with the future loan sale transactions.




                                       11
<PAGE>

6.       NOTES PAYABLE

<TABLE>
Notes payable consist of the following (in thousands):

                                                                               Weighted Average Interest Rate
                                                                               ------------------------------
                                                    Total Outstanding       At Period End       During the Period
                                                    -----------------       -------------       -----------------

<S>                                                         <C>                 <C>                   <C>
December 31, 2000:
Commercial paper                                            $ 1,265,000         6.66%                 6.63%
National Australia Bank unsecured facility                    1,674,000         6.76%                 6.70%
                                                  ----------------------
  Total                                                     $ 2,939,000
                                                  ======================

September 30, 2000:
Commercial Paper                                            $ 1,500,000         6.63%                 6.16%
National Australia Bank Unsecured Facility                    1,735,400         6.70%                 6.25%
                                                  ----------------------
  Total                                                     $ 3,235,400
                                                  ======================
</TABLE>


HomeSide  has  established  a $1.5 billion  commercial  paper  program  which is
supported  by an  independent  syndicate  of banks under a credit  facility.  On
October 16, 2000,  HomeSide entered into a $1.5 billion back-up credit facility.
This  agreement  replaces  HomeSide's  previous  bank credit  facility  and will
terminate  on  October  15,  2002.  Borrowings  under the credit  facility  bear
interest at rates per annum,  based on, at HomeSide's option, (i) the Eurodollar
rate plus an applicable margin,  (ii) the greater of the federal funds rate plus
an applicable  margin or the prime rate,  (iii) in the case of swingline  loans,
the  federal  funds  rate  plus an  applicable  margin,  or (iv) in the  case of
competitive bid loans, the lowest competitive Eurodollar or fixed rate submitted
by a bidding  lender.  The primary purpose of this credit facility is to provide
liquidity  back-up for HomeSide's  $1.5 billion  commercial  paper program.  The
outstanding  commercial  paper  reduces  available  borrowings  under the credit
facility.  At December 31,  2000,  there were no amounts  outstanding  under the
credit facility.

HomeSide's  unsecured  revolving  credit  facility  with the  National  provides
short-term  funding  up to  $2.5  billion,  subject  to  limits  imposed  by the
National's regulatory authorities. As of December 31, 2000, the National's limit
to lend funds to HomeSide, a non-bank affiliate, was approximately $2.0 billion.
Borrowings  under the credit facility may be overnight or for periods of 7,30,60
or 90 days.  For  overnight  borrowings,  the interest rate is determined by the
National  at the  time of the  borrowing.  For  LIBOR -  based  borrowings,  the
interest rate is charged at the corresponding LIBOR rate.


7.       LONG-TERM DEBT

Parent Notes

On May 14, 1996,  the Company issued $200.0 million of 11.25% notes (the "Parent
Notes") maturing on May 15, 2003, and paying interest semiannually in arrears on
May 15 and  November 15 of each year.  The Parent  Notes are  redeemable  at the
option  of the  Company,  in whole or in part,  at any time on or after  May 15,
2001,  at certain  fixed  redemption  prices.  The Parent Notes are secured by a
pledge of the common  stock of  HomeSide  Lending,  the  Company's  wholly-owned
subsidiary.  The Company is in compliance with all requirements  included in the
indenture  relating  to the  Parent  Notes.  The  Company  used a portion of the
proceeds  from its February 5, 1997  offering of common  stock to pre-pay  $70.0
million of the Parent Notes at a premium of $7.9 million. The amount outstanding
at December  31,  2000 was $130.0  million.  The balance of the Parent  Notes at
December 31, 2000, including the fair value adjustment resulting from the merger
with the National, was $140.7 million.








                                       12
<PAGE>

Medium-term notes

As of  December  31,  2000,  outstanding  medium-term  notes  issued by HomeSide
Lending under its shelf registration statement were as follows (in thousands):
<TABLE>

        Issue Date               Outstanding Balance            Coupon Rate               Maturity Date

<S>                                 <C>                        <C>                      <C>
June 30, 1997                       $  200,000                 6.88%                    June 30, 2002
June 30, 1997                           40,000                 6.82%                    July 2, 2001
July 1, 1997                            15,000                 6.86%                    July 2, 2001
July 31, 1997                          200,000                 6.75%                    August 1, 2004
September 15, 1997                      45,000                 6.77%                    September 17, 2001
April 23, 1998                         125,000                 5.79% *                  April 24, 2001
May 22, 1998                           225,000                 6.20%                    May 15, 2003
June 9, 2000                           215,000                 7.07% *                  June 10, 2002
June 9, 2000                           200,000                 6.89% *                  April 9, 2002
June 9, 2000                            85,000                 7.07% *                  June 10, 2002
August 1, 2000                          75,000                 6.97% *                  August 1, 2002
September 14, 2000                      75,000                 6.79% *                  September 16, 2002
September 14, 2000                      60,000                 6.94% *                  September 15, 2003
September 14, 2000                      25,000                 7.00%                    September 16, 2002
September 15, 2000                     100,000                 6.79% *                  September 16, 2002
September 15, 2000                      50,000                 6.86% *                  September 16, 2002
December 4, 2000                       125,000                 6.98% *                  December 4, 2002
December 4, 2000                        75,000                 6.98% *                  December 4, 2002
December 4, 2000                        50,000                 6.87% *                  December 4, 2002
                             ----------------------------
  Total                             $1,985,000
                             ============================
----------
<FN>
*  Represents initial interest rate for floating rate note
</FN>
</TABLE>

As of December 31, 2000, the outstanding  fixed rate  medium-term  notes of $750
million had been  effectively  converted  by interest  rate swap  agreements  to
floating-rate  notes.  During the quarter ended  December 31, 2000, the value of
the  interest  rate swap  contracts  increased  by $13.4  million and offset the
changes in the fair value of the  medium-term  notes due to the hedge risk.  The
fair value of interest  rate swap  contracts  designated as fair value hedges of
medium-term  notes was $13.2  million  at  December  31,  2000.  See note 5. The
weighted average borrowing rates on medium-term borrowings issued for the three-
month period ended December 31, 2000,  including the effect of the interest rate
swap agreements,  was 6.97%. Net proceeds from the issuances were primarily used
to reduce the amounts  outstanding  under the bank credit  agreement and to fund
acquisitions of servicing rights.

Mortgage note payable

In connection with the acquisition of BancBoston Mortgage Corporation,  HomeSide
assumed a mortgage  note  payable  that is due in 2017 and bears  interest  at a
stated rate of 9.5%.  HomeSide's  main office  building is pledged as collateral
for the mortgage note payable.  The balance of the mortgage  payable at December
31, 2000,  including the fair value  adjustments  resulting from the merger with
the National, was $22.3 million.


8.       NEW ACCOUNTING STANDARDS

In September 2000, the Financial  Accounting Standards Board issued Statement of
Financial  Accounting Standards No. 140, "Accounting for Transfers and Servicing
of  Financial  Assets and  Extinguishments  of  Liabilities"  ("SFAS 140") which
replaces  Statement No. 125. This statement  revises the standards of accounting
for securitizations and other transfers of financial assets and collateral along
with  requiring  certain  disclosures.  This  statement  is  effective  for  the
transfers and servicing of financial assets and  extinguishments  of liabilities
occurring   after  March  31,  2001.  It  is  effective  for   recognition   and
reclassification  of collateral for fiscal years ending after December 15, 2000.
Management  does  not  expect  the  requirements  of  this  standard  to  have a
significant impact on the financial statements.

                                       13
<PAGE>



9.       DIVIDENDS

On October 23, 2000,  the Company paid  dividends to the Parent in the amount of
$24.0 million.

10.      SUBSEQUENT EVENTS

On January 31, 2001, the Company filed a  registration  statement on Form S-3 to
increase  its  shelf  registration  related  to its  medium-term  notes  by $1.0
billion.



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

General

HomeSide  International,   Inc.  ("HomeSide"  or  the  "Company"),  through  its
wholly-owned  operating subsidiary HomeSide Lending,  Inc. ("HomeSide Lending"),
is one of the largest full service residential mortgage banking companies in the
United States. The Company is the successor to HomeSide,  Inc. ("HomeSide,  Inc.
Predecessor").  On  February  10,  1998,  National  Australia  Bank,  Ltd.  (the
"National")  acquired  all  outstanding  shares of the common stock of HomeSide,
Inc.  Predecessor  and the Company  adopted a fiscal year end of September 30 to
conform to the fiscal  year of the  National.  HomeSide,  Inc.  Predecessor  was
formed through the acquisition of the mortgage banking operations of BankBoston,
N.A. ("BBMC  Predecessor" to HomeSide,  Inc.  Predecessor) on March 16, 1996 and
subsequently purchased the mortgage banking operations of Barnett Banks, Inc.

HomeSide's  strategy  emphasizes  variable cost mortgage  origination,  low cost
servicing,  and  effective  risk  management.   Headquartered  in  Jacksonville,
Florida,  HomeSide  Lending  ranks as the 10th  largest  originator  and the 5th
largest  servicer  in the United  States at  December  31,  2000,  based on data
published by Inside Mortgage Finance.

HomeSide  plans to continue to expand its core  operations  through (i) improved
economies  of  scale in  servicing  costs;  (ii)  increased  productivity  using
proprietary  technology;  and  (iii)  expanded  and  diversified  variable  cost
origination  channels.  In addition,  HomeSide intends to pursue additional loan
portfolio  acquisitions and strategic  origination  relationships  with mortgage
lenders and other entities that offer similar financial services.

Operating  results  for the  three-month  periods  ended  December  31, 2000 and
December  31, 1999 are not  necessarily  indicative  of the results  that may be
expected for the fiscal year ending September 30, 2001. For further information,
refer to the consolidated financial statements and footnotes thereto included in
the  Form  10-K  for the  fiscal  year  ended  September  30,  2000 of  HomeSide
International, Inc.

Forward-Looking Statements

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

Loan Production Activities

HomeSide  participates  in several  origination  channels,  including  wholesale
origination  (correspondent,   co-issue,  and  broker)  and  direct  origination
channels. The direct channels include internet, telemarketing,  direct mail, and
mortgages related to affinity group and co-branding partnerships.  HomeSide also
purchases servicing rights in bulk from time to time.  HomeSide's strategy is to
customarily  sell all loans that it originates or purchases  while retaining the
servicing  rights to such loans.  This  multi-channel  production  base provides


                                       14
<PAGE>

access to and flexibility among production  channels in a wide variety of market
and economic conditions. By focusing on production channels with a variable cost
structure,  HomeSide  eliminates  the fixed costs  associated  with  traditional
mortgage  branch  offices.  Without  the burden of high  fixed cost  origination
overhead,  HomeSide is well  positioned  to weather a variety of  interest  rate
environments.

The following  information  regarding loan production activities for HomeSide is
presented  to aid in  understanding  the  results of  operations  and  financial
condition of HomeSide for the  three-month  periods ended  December 31, 2000 and
December 31, 1999 (in millions):
<TABLE>


                                       For the Three           For the Three
                                       Months Ended            Months Ended
                                     December 31, 2000       December 31, 1999
                                    --------------------    --------------------
<S>                                      <C>                     <C>
Correspondent                            $ 2,774                 $ 2,563
Co-issue                                   3,150                   2,430
Broker                                       722                     469
                                         -------                 -------
  Total wholesale                          6,646                   5,462
Direct                                       231                     147
                                         -------                 -------
  Total production                         6,877                   5,609
Bulk acquisitions                         13,196                   4,558
                                         -------                 -------
  Total production and
    Acquisitions                         $20,073                 $10,167
                                         =======                 =======
</TABLE>

Total loan  production,  excluding bulk  acquisitions,  was $6.8 billion for the
three  months  ended  December  31, 2000  compared to $5.6 billion for the three
months ended  December 31, 1999, a 21% increase.  The increase was a function of
HomeSide's   ability  to  leverage   origination   alliances  and  technological
enhancements  and  was  also  influenced  by  a  more  favorable  interest  rate
environment.  When interest rates decline,  the size of the mortgage origination
market  increases  as home  ownership  becomes more  affordable  and as existing
mortgagors refinance their loans.  Refinances were 27% of HomeSide's  production
volume for the quarter ended December 31, 2000,  compared to 21% for the quarter
ended December 31, 1999.

Economies of scale are vital to the  long-term  viability of mortgage  servicing
and are increasingly important to remain competitive in the industry. During the
quarter,   HomeSide  continued  to  pursue  growth  opportunities  through  bulk
acquisitions  of  mortgage  servicing  rights  and  expansion  of its  Preferred
Partnership program.  Preferred  partnerships generally include a bulk servicing
acquisition and an ongoing mortgage origination flow. HomeSide services loans on
a priority  basis on behalf of its  Preferred  Partners  and offers the customer
mortgage-related  products.  Preferred Partner relationships  contributed 25% of
HomeSide's   production  volume  for  the  quarter.   Homeside   completed  bulk
acquisitions  totaling  $13.2  billion and $4.6 billion  during the  three-month
periods ended December 31, 2000 and 1999, respectively.

Servicing Portfolio

Based on certain industry servicing statistics, management asserts that HomeSide
is one of the most  efficient  mortgage  servicers in the industry  based on its
servicing  cost per loan and the  number of loans  serviced  per  employee.  The
servicing operation makes extensive use of state-of-the-art technology,  process
re-engineering and expense management.  With a portfolio size of $187.6 billion,
HomeSide services the loans of approximately 2.1 million  homeowners from across
the United States and is committed to protecting the associated asset value by a
sophisticated  risk management  strategy.  HomeSide  anticipates its low cost of
servicing loans will continue to maximize the bottom-line  impact of its growing
servicing  portfolio.  HomeSide's  focus on efficient and low cost  processes is
pursued  through the  selective  use of  automation,  strategic  outsourcing  of
selected  servicing   functions  and  effective  control  of  delinquencies  and
foreclosures.

The number of loans  serviced at December  31,  2000 was  2,098,711  compared to
1,706,806  at December  31,  1999.  HomeSide's  strategy is to grow its mortgage
servicing   portfolio  by   concentrating  on  variable  cost  loan  origination
strategies and selective portfolio  acquisitions,  and as a result, benefit from
improved  economies of scale. A key to HomeSide's  future growth is the capacity
provided by its proprietary  servicing software.  This system allows HomeSide to
double the number of loans  typically  serviced  on a single  system and is also
used by the National to service its growing loan portfolio.



                                       15
<PAGE>

The following  information  on the dollar amounts of loans serviced is presented
to aid in  understanding  the results of operations  and financial  condition of
HomeSide for the  three-month  periods ended  December 31, 2000 and December 31,
1999 (in millions):

                                         For the Three           For the Three
                                         Months Ended            Months Ended
                                       December 31, 2000       December 31, 1999
                                       ------------------      -----------------
Balance at beginning of
  Period                                   $173,310                $145,552
   Additions, net                            20,053                  10,157
   Scheduled amortization                     1,196                   1,038
   Prepayments                                4,407                   3,690
   Foreclosures                                 208                     246
                                           --------                --------
       Total reductions                       5,811                   4,974
                                           --------                --------

Balance at end of period                   $187,552                $150,735
                                           ========                ========


Results of Operations (Restated)

For the three months ended  December 31, 2000 compared to the three months ended
December 31, 1999

   Summary (Restated)

Restated  net (loss)  income was  ($154.8)  million for the three  months  ended
December 31, 2000, compared to $18.2 million for the three months ended December
31, 1999.  The $173.0  million  decrease is  primarily  due to the impact of the
valuation provision for the mortgage servicing rights driven by the acceleration
of the projected  prepayment speeds associated with declining  mortgage interest
rates.  Restated total  (expenses)  revenues for the three months ended December
31, 2000 of ($162.2)  million compared to total revenue of $92.1 million for the
three months ended December 31, 1999. The $254.3 million  decrease was primarily
due to the impact of the valuation  provision for the mortgage servicing rights.
Restated net servicing  (expense)  revenue resulted in a net expense of ($171.5)
million,  a decrease of $245.2 million  compared to net revenue of $73.7 million
for the three months ended  December 31, 1999.  This change was primarily due to
the impact of the valuation  provision for the mortgage  servicing  rights.  Net
interest expense increased  primarily due to the narrowing of the spread between
short-term  and  long-term  interest  rates and the  funding of higher  mortgage
servicing  assets.  Net  mortgage  origination  revenue  increased  due  to  the
declining  interest  rate  environment  that  resulted in  increased  production
volumes. Total expenses increased as a result of higher expenses associated with
the increase in production volumes and the servicing portfolio.  Restated income
tax expense for the three  months  ended  December  31,  2000,  decreased  $89.4
million compared to the three months ended December 31, 1999, primarily due to a
net loss  resulting  from the  impact of the  valuation  provision  of  mortgage
servicing rights.

Net Servicing (Expense) Revenue (Restated)

The Company  incurred a net  (expense) of ($171.5)  million for the three months
ended  December 31, 2000  compared to net revenue of $73.7 million for the three
months ended December 31, 1999. Net servicing  (expense) revenue is comprised of
mortgage  servicing  fees net of guaranty  fees,  ancillary  servicing  revenue,
amortization  and  valuation  provision of mortgage  servicing  rights,  and the
earnings impact of risk management of mortgage servicing rights.

Mortgage  servicing  fees  increased 22% to $208.2  million for the three months
ended  December 31, 2000  compared to $171.2  million for the three months ended
December 31, 1999,  primarily as a result of  portfolio  growth.  The  servicing
portfolio  increased  by $36.9  billion to $187.6  billion at December  31, 2000
compared to $150.7  billion at December 31, 1999, a 25% increase.  The portfolio
growth is primarily due to loan  production  and bulk  acquisitions.  HomeSide's
weighted average interest rates of the mortgage loans in the servicing portfolio
were 7.59% and 7.45% at December 31, 2000 and  December 31, 1999,  respectively.
The weighted average servicing fee, net of guaranty fees and including ancillary
income,  for the servicing  portfolio was 46.6 basis points for the three months
ended December 31, 2000 compared to 46.7 basis points for the three months ended
December 31, 1999.

Amortization  expense was $120.3 million for the three months ended December 31,
2000 compared to $97.5  million for the three months ended  December 31, 1999, a
23% increase.  Amortization  expense increased primarily as a result of a higher
average balance of mortgage  servicing  rights during the quarter and the impact
of declining  interest rates during the later part of the quarter.  Amortization
charges are highly dependent upon the level of prepayments during the period and
changes in prepayment  expectations,  which are significantly  influenced by the
direction and level of long-term interest rate movements. A decrease in mortgage
interest  rates  results  in  an  increase  in  prepayment   estimates  used  in


                                       16
<PAGE>

calculating periodic amortization expense. Because mortgage servicing rights are
amortized  over the  expected  period of service  fee  revenues,  an increase in
mortgage  prepayment  activity  typically results in a shorter estimated life of
the mortgage servicing assets and, accordingly, higher amortization expense.

Restated  valuation  provision of mortgage  servicing rights of ($624.9) million
for the three months ended  December 31, 2000 is primarily due to the impairment
of the mortgage  servicing  rights as described in detail in the Risk Management
of Mortgage Servicing Rights below.

Restated risk management of mortgage  servicing  rights income of $365.5 million
is  primarily  due  to the  $370.4  million  gain  on  dedesignated  derivatives
determined to no longer qualify for hedge accounting,  as described in detail in
the section on Risk  Management  of Mortgage  Servicing  Rights in note 5, "Risk
Management  and  the  Accounting   for   Derivative   Instruments   and  Hedging
Activities".

Net Interest (Expense) Revenue

Net interest  (expense)  revenue is driven by the level of interest  rates,  the
direction in which rates are moving and the spread  between  short and long-term
interest rates and the rates at which HomeSide is able to borrow.  These factors
influence the size of the residential  mortgage  origination market,  HomeSide's
loan  production  volumes and the interest  income  HomeSide  earns on loans and
interest  paid to its lenders.  These  factors also  influence  risk  management
results that affect the level of required funding needs.

Loan  refinancing  levels are the largest  contributor to changes in the size of
the mortgage  origination  market.  As interest  rates  decline,  more borrowers
refinance their mortgages,  resulting in an increase in the mortgage origination
market.  Higher loan  production  volumes result in higher  average  balances of
loans held for sale and  consequently  higher  levels of  interest  income  from
interest earned on such loans prior to their sale. This higher level of interest
income due to increased volumes is partially offset by the lower rates earned on
the loans.

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

Net interest  (expense)  revenue  totaled  ($19.2)  million for the three months
ended  December  31, 2000  compared to $0.6  million for the three  months ended
December 31, 1999. The increase in net interest expense was primarily due to the
narrowing of the spread between  short-term and long-term  interest rates. While
mortgage  rates  declined by 58 basis points for the quarter,  short-term  LIBOR
rates  declined by only 6 basis points and the spreads  continued to narrow from
their recent lows.  Despite the decline in mortgage rates during the second half
of the quarter,  average  mortgage rates for the quarter ended December 31, 2000
of 7.69% were down only 17 basis  points from an average of 7.86% in the quarter
ended December 31, 1999.  However,  the interest rate  environment  for the most
recent quarter  differs quite  substantially  versus the same quarter from prior
year.  The prior year quarter  ended  December  31, 1999  reflected a pattern of
rising interest rates and economic signs of a strong economy. During the quarter
ended  December  31,  2000,  interest  rates  continued  to decline as  economic
indicators  pointed to a slowing economy and the forward yield curve reflected a
bias toward lower interest rates.  However,  average LIBOR rates for the quarter
ended December 31, 2000 of 6.65% were 87 basis points higher than the average of
5.78% for the quarter ended December 31, 1999. Consequently, average spreads for
the quarter  ended  December 31, 2000 were 104 basis points versus an average of
208 basis points in the quarter ended December 31, 1999.

The higher  short-term  rates for the quarter  also  increased  the funding cost
relative  to  the  Company's   investment  in  mortgage  servicing  rights.  The
unfavorable  rate variance versus the quarter of a year ago was partially offset
by hedge gains for the quarter of $370 million  which  helped to reduce  funding
needs  relative to the  mortgage  servicing  asset.  Additionally,  increases in
funding  costs  were  offset in part by  increased  interest  credits  earned on
custodial balances due to higher short-term interest rates and the growth of the
servicing portfolio.

Net Mortgage Origination Revenue

Net mortgage  origination revenue is comprised of fees earned on the origination
of mortgage  loans,  fees charged to review loan  documents for  purchased  loan
production,  risk management hedge results,  and gains and losses on the sale of
loans.

Net mortgage  origination  revenue was $22.6  million for the three months ended
December 31, 2000 compared to $17.0 million for the three months ended  December
31, 1999.  The increase was primarily  due to an increase in production  volumes
resulting  from the  factors  discussed  in the section  titled loan  production
activities.


                                       17
<PAGE>

Other Income

Other  income for the three  months  ended  December  31, 2000 was $5.8  million
compared to $0.9  million for the three months  ended  December  31, 1999.  This
increase  primarily  resulted  from  a  sale-leaseback   transaction   involving
HomeSide's  facility in San Antonio,  Texas  entered into on October 2, 2000. In
accordance  with  SFAS 98,  "Accounting  for  Leases",  HomeSide  recognized  an
immediate gain of $4.5 million. In addition, a deferred gain of $7.3 million was
recorded and is amortized over the life of the lease.

Salaries and Employee Benefits

Salaries and  employee  benefits  expense of $29.9  million for the three months
ended  December 31, 2000 was  relatively  flat compared to $29.8 million for the
three months ended December 31, 1999. The average number of full-time equivalent
employees  was 2,361 for the three  months ended  December 31, 2000  compared to
2,551 for the three months ended December 31, 1999.

Occupancy and Equipment Expense

Occupancy and equipment expense primarily  includes rental expense,  repairs and
maintenance  costs,  certain  computer  software  expenses and  depreciation  of
HomeSide's premises and equipment. Occupancy and equipment expense for the three
months ended December 31, 2000 was $9.8 million compared to $8.6 million for the
three months ended  December 31, 1999, a 14%  increase.  The increase in expense
was mainly due to the increased  expenses incurred to enhance processing systems
and technology expenditures necessary to support targeted business growth.

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

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

The servicing losses on investor-owned  loans and  foreclosure-related  expenses
totaled $10.1  million for the three months ended  December 31, 2000 compared to
$8.4  million for the three months  ended  December  31, 1999.  The increase was
primarily  attributable to an increase in servicing losses related to the growth
of the servicing portfolio.

Included in the balance of accounts payable and accrued  liabilities at December
31, 2000 is a reserve for estimated servicing losses on investor-owned  loans of
$16.7 million.  The reserve has been established for potential losses related to
the  mortgage  servicing  portfolio.  Increases  to the  reserve  are charged to
earnings as servicing losses on  investor-owned  loans. The reserve is decreased
for  actual  losses  incurred  related  to  the  mortgage  servicing  portfolio.
HomeSide's  historical loss experience on VA loans generally has been consistent
with  industry  experience.  Management  believes  that HomeSide has an adequate
level of  reserve  based on  servicing  volume,  portfolio  composition,  credit
quality and historical loss rates, as well as estimated future losses.

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

                        Servicing Portfolio Delinquencies
                             (percent by loan count)

                                                                                  December 31, 2000      December 31, 1999
                                                                                 --------------------    -------------------
<S>                                                                                     <C>                    <C>
Servicing Portfolio Delinquencies, excluding bankruptcies (at end of period)
          30 days                                                                       3.56%                  3.37%
          60 days                                                                       0.70%                  0.62%
          90+ days                                                                      0.57%                  0.59%
                                                                                 --------------------    -------------------
               Total past due                                                           4.83%                  4.58%
                                                                                 ====================    ===================

          Foreclosures pending                                                          0.51%                  0.55%
                                                                                 ====================    ===================
</TABLE>


                                       18
<PAGE>

Other Expenses and Goodwill Amortization

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

Other  expenses were $19.4 million for the three months ended December 31, 2000,
compared to $13.3  million for the three months  ended  December 31, 1999, a 46%
increase.  The increase is primarily  due to an increase in expenses  associated
with the increase in the servicing  portfolio and increased  production volumes.
Goodwill  amortization  was $8.8  million  and $9.0  million for the three month
periods ended December 31, 2000 and December 31, 1999, respectively.

Income Tax (Benefit) Expense (Restated)

HomeSide's income tax (benefit) expense was ($84.5) million for the three months
ended  December  31, 2000  compared to $4.9  million for the three  months ended
December 31, 1999. The effective  income tax rates for the  three-month  periods
ended  December 31, 2000 and  December 31, 1999 were 35% and 21%,  respectively.
The decrease in the income tax (benefit) expense was due to a net loss resulting
from the impact of the  valuation  provision  of mortgage  servicing  rights and
income  recognized from the change in value of the derivatives  determined to no
longer qualify for hedge accounting.


Risk Management  (Restated)

Mortgage  banking  entities face a broad range of risk that must be  proactively
managed to  achieve  success in the  industry.  The  Company  has  utilized  the
enterprise-wide  risk management  structure that has been implemented and proven
at the National and its global entities. The structure comprises a common policy
framework and a set of controls that are utilized to achieve  standardization of
risks.  Each  business  function  is  responsible  for using  standardized  risk
assessment   templates   along   with  best   practices   methodology   for  the
identification  and  quantification  of the particular risk it is exposed to and
for the implementation of appropriate policies and procedures.

The Company's Risk Council,  comprising  executive and senior management as well
as  representation  from internal audit, is the principal risk operating  policy
decision  making body within the Company.  Risk  Council's role is to constantly
monitor and assess the  Company's  risk profile in existing and future  business
operations,  and to assist  business units in the design and  implementation  of
appropriate risk management policies and strategies.

The Risk Council  provides  direction and oversight for many types of risks such
as credit, operations,  legislative compliance,  e-commerce, business continuity
and disaster  recovery.  Certain of the  Company's  other major risk areas (e.g.
market risk) are more fully discussed below:

Risk Management of Market Risk

Market risk recognizes the potential change in the value of assets,  liabilities
and other  commitments as a result of movement in interest  rates,  asset prices
and volatility.  Certain members of the Company's Risk Council also comprise the
Company's  Asset  and  Liability  Management  Committee  ("ALCO")  which,  under
delegated  authority from the Board, sets policies in relation to the management
of market risk, corporate funding and balance sheet management.  Representatives
of the Company's ALCO report to the National's  ALCO  concerning risk management
and also participate in the National's group ALCO meetings.

As more fully  discussed in the notes to the financial  statements,  the Company
adopted  SFAS No.  133,  "Accounting  for  Derivative  Instruments  and  Hedging
Activities",  effective October 1, 2000. Accordingly, for the three-month period
ended  December  31,  2000,  all of the  Company's  risk  management  derivative
instruments are recorded at fair value.  Changes in the value of risk management
derivative instruments designated as qualifying fair value hedging relationships
are  recognized in current  earnings  along with the changes in the value of the
qualifying  hedged  liabilities.   Changes  in  the  value  of  risk  management
derivative  instruments designated as qualifying cash flow hedging relationships
of forecasted loan sale transactions are recorded to other comprehensive  income
("OCI") and reclassified to earnings concurrent with settlement of the loan sale
transactions.  The accounting  policies  relevant to derivative  instruments and
hedging  activities for each of the Company's key risk management areas are more
fully discussed in note 5 to the consolidated financial statements.


                                       19
<PAGE>

Market Environment

The market  environment during the quarter ended December 31, 2000 was extremely
volatile.  During the  quarter,  key  interest  rates along the one- to ten-year
sectors of the treasury curve declined,  on average,  by approximately 100 basis
points.  Mortgage  rates declined by 58 basis points from 7.88% at September 30,
2000 to 7.30% at  December  31,  2000  with  substantially  all of the rate move
occurring  in the second half of the quarter.  Other key interest  rates for the
Company  include 5- and  10-year  swap rates  which  declined by 79 and 78 basis
points, respectively.

Overall,  interest rate spreads on mortgage products were extremely volatile and
reflected a widening  pattern in relation to interest rates on treasury and swap
products.  The same cannot be said for the  relationship  of  mortgage  rates to
short-term LIBOR rates.  One-month LIBOR was down only 6 basis points from 6.62%
at  September  30,  2000 to 6.56% at December  31,  2000.  As a result,  spreads
between  mortgage rates and one-month LIBOR narrowed by  approximately  50 basis
points during the quarter and have narrowed by just over 100 basis points versus
the same quarter of 1999.

During the quarter,  the Company's risk management programs continued to achieve
effective  hedge  results in relation to the risk being  hedged.  Following is a
summary of risk management activities and results for the quarter ended December
31, 2000:

Risk Management of Loan Production Activities

The Company  maintains a risk management  program to protect and manage interest
rate risk and pricing risk associated with its mortgage  committed  pipeline and
mortgage  inventory.  In the normal  course of  business,  the  Company  extends
interest rate lock commitments ("IRLCs" or "commitments") to borrowers who apply
for loan funding and meet certain credit and underwriting criteria. IRLCs in the
mortgage  pipeline  expose the Company to interest  rate and pricing  risk. In a
rising rate environment,  the aggregate value of the Company's commitments tends
to decrease in value and,  generally,  at an  accelerating  rate. In a declining
rate  environment,  the value of the Company's  commitments tends to increase in
value.  However,  the rate of increase in the value tends to  decelerate  as the
likelihood of the borrower closing on the loan decreases if market rates decline
by a meaningful amount versus the borrower's committed rate. As part of its risk
management processes, the Company has devoted substantial resources and modeling
solutions to enable  management  to project the  expected  percent of IRLCs that
will  ultimately fund under  different  interest rate scenarios  (referred to as
"pull-through  rates"). The success of the Company's risk management  strategies
relies on proactive  analysis of historical  and projected  pull-through  rates.
However,  since borrower behavior cannot be perfectly  predicted and modeled, an
element of economic  ineffectiveness  can be expected in the Company's  pipeline
hedging relationships.

In the aggregate,  the Company's  strategy  involves the use of a combination of
mortgage  forwards and mortgage options to maintain a risk management  coverage.
The Company utilizes  mortgage  forward  delivery  contracts to hedge a baseline
portion of the Company's  pipeline  composed of interest  rate lock  commitments
that  management  believes  are probable of closing.  Additionally,  the Company
utilizes  options on mortgages and certain other products to hedge an element of
the  pipeline  which is  considered  more  uncertain  of closing,  and for which
pull-through rates are likely to be volatile.  During the quarter ended December
31, 2000, the Company's risk management  strategy was effective in the declining
interest  rate  environment  as the  increase  in  the  value  of the  Company's
commitments  more  than  offset  the  losses in the  value of the  related  risk
management derivative instruments. During the quarter ended December 31, 2000, a
net gain of approximately $7.0 million  attributable to pipeline hedging results
was recognized to earnings and is included in net mortgage  origination  revenue
in the consolidated  statements to income.  Pursuant to the requirements of SFAS
133 (which  are  discussed  in note 5 to the  Company's  consolidated  financial
statements)   interest  rate  lock   commitments  and  related  risk  management
derivative  instruments  are accounted for as  non-designated  derivatives  with
changes in their values recorded to current earnings.

Interest  rate  lock  commitments  that  are  ultimately   funded  (closed)  are
classified  as loans held for sale and are  included in the  Company's  mortgage
inventory.  Closed loans in the mortgage  inventory are also subject to interest
rate and pricing risk. The Company's risk management program involves the use of
mortgage  forward  delivery  contracts  to  hedge  100%  of its  agency-eligible
conforming  loans as forecasted  loan sales.  Pursuant to the terms of SFAS 133,
the Company accounts for the forward  delivery  contracts as cash flow hedges of
forecasted loan sales. The forward  contracts  achieve  effective offset against
the changes in the value of the loans in that the forward contracts  effectively
fix the future loan  delivery  price.  At December 31,  2000,  losses on forward
delivery contracts of $4.7 million were included in other  comprehensive  income
(OCI). Pursuant to the requirements of SFAS 133, the related unrealized gains in
the  underlying  mortgage loans  accounted for as forecasted  loan sales are not
recognized in the Company's  financial  statements at December 31, 2000. Rather,
the  unrealized  gains will be  recognized  to earnings  on the loan  settlement
dates, together with the related deferred hedge losses that will be reclassified
to earnings (from OCI) as the  forecasted  loan sales are  consummated  over the
next 90 days.


                                       20
<PAGE>

Risk Management of Mortgage Servicing Rights (Restated)

Mortgage  servicing  rights  represent  the  capitalized  value of the estimated
future net servicing revenues associated with the Company's servicing portfolio.
The Company maintains a risk management program designed to protect the value of
mortgage servicing rights from changes in value due to changes in estimated loan
prepayment speeds, which are mainly influenced by changes in interest rates.

The value of mortgage  servicing  rights is  extremely  sensitive  to changes in
interest  rates  since  interest  rates are the  primary  driver  of actual  and
projected prepayment rates. As interest rates decline, prepayment rates increase
as a result of actual and expected  refinancing  activities of  borrowers.  As a
result,  the value of mortgage  servicing  rights decreases in value as interest
rates decline and,  generally,  at accelerating rates depending in large measure
on the note rates of the underlying  loans in relation to market interest rates.
The value of the  Company's  mortgage  servicing  rights is based on the present
value of expected  cash flows  received  over the life of the loan using  vendor
models  which  incorporate  prepayment  estimates to forecast  estimated  future
servicing revenues, servicing costs, ancillary revenues, escrow earnings, credit
losses and other expenses.

The Company's risk  management  program  involves the use of a portfolio of risk
management  derivative  instruments,  which  increase in value as interest rates
decline.  More  specifically,   management  uses  a  combination  of  derivative
instruments  designed to provide effective offset to changes in the value of the
mortgage servicing rights in different interest rate scenarios. The Company also
attempts  to  manage  basis  risk,  term  sector  risk,  and  liquidity  risk by
diversifying  its  portfolio  with an array of derivative  instruments  that are
approved for use by the  Company's  ALCO.  Accordingly,  the hedge  portfolio is
generally  comprised of mortgage  products,  swap products and treasury products
that are structured along various points of the yield curve.

Since the inception of HomeSide in March of 1996,  the Company's  hedge strategy
has been effective in providing  effective offset to changes in the value of its
mortgage  servicing rights.  However,  as of the three months ended December 31,
2000,  the  Company  did  not  qualify  for  hedge  accounting  pursuant  to the
requirements  of SFAS 133 (see Note 2). As a result,  the Company  recognized to
current earnings $370.4 million in gains on derivatives  determined to no longer
qualify for hedge accounting and a $614.4 million  impairment  provision for the
mortgage servicing rights asset for the three months ended December 31, 2000.

As part of its risk  management  program,  the Company  maintains  certain  risk
management  instruments  that are accounted for as  non-designated  derivatives.
These risk management  instruments are structured to provide a level of economic
offset and to provide a level of  protection  against  decreases in the value of
certain  mortgage  servicing  rights that do not  qualify for hedge  designation
under the terms of SFAS 133.  During the quarter  ended  December 31, 2000,  the
Company recorded a valuation  provision of $10.5 million related to decreases in
the  value of  non-designated  mortgage  servicing  rights.  The  non-designated
derivative valuation  provisions are included with the impairment  provisions in
the  caption   "valuation   provision  of  mortgage  servicing  rights"  in  the
consolidated statements of income.


Valuation  provision of mortgage servicing rights             $     (614,361)
Valuation provision on non-designated portfolio                      (10,500)
                                                              -----------------

Total valuation provision of mortgage servicing rights        $     (624,861)
                                                              =================

Risk Management of Corporate Funding

As part of its corporate  funding and balance sheet management  strategies,  the
Company  maintains a desired level of its total  borrowings  through  short-term
funding sources.  To meet the Company's  financing needs,  short-term funding is
provided  through the  Company's  commercial  paper  program and its  short-term
facility with the Parent.  Additionally,  the Company can alter its weighting in
fixed-rate funding by converting  medium-term notes to floating rate. During the
three-month  period  ended  December  31,  2000,  the  Company was party to $750
million in interest rate swaps which were  effective in converting  $750 million
of  medium-term  notes to  LIBOR-based  funding.  As  discussed in note 5 to the
financial  statements,  the interest rate swaps were accounted for as fair value
hedges of the designated medium-term notes.


                                       21
<PAGE>

Liquidity and Capital Resources

The Company's  principal  financing needs are the financing of loan  origination
activities and the investment in mortgage servicing rights. To meet these needs,
the Company  currently  utilizes  funding from its commercial  paper program,  a
credit facility with the National,  medium-term notes, an independent  syndicate
of  banks,  repurchase  agreements,  and cash  flow  from  operations.  HomeSide
continues to investigate  and pursue  alternative and  supplementary  methods to
finance its growing  operations  through the public and private capital markets.
These may include methods  designed to expand the Company's  financial  capacity
and  reduce  its  cost of  capital.  In  addition,  to  facilitate  the sale and
distribution of certain mortgage products, HomeSide Mortgage Securities, Inc., a
wholly-owned   subsidiary  of  HomeSide  Lending,  Inc.,  maintains  operational
capabilities to facilitate the issuance of mortgage-backed securities.

Operations

Net cash provided by  operations  for the quarters  ended  December 31, 2000 and
December  31, 1999 was $403.8  million and $202.5  million,  respectively.  Cash
provided from  servicing fee income,  loan sales and  principal  repayments  was
partially offset by cash used for the origination and purchase of mortgage loans
held for sale.  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 loan production levels.

Investing

Net cash used in investing  activities  for the quarters ended December 31, 2000
and December 31, 1999 was $383.5 million and $285.0 million, respectively.  Cash
used in  investing  activities  was  primarily  for  the  purchase  of  mortgage
servicing  rights and risk management  contracts.  Cash was provided by proceeds
from risk management contracts and early pool buyout reimbursements. Future uses
of cash for investing  activities will be dependent on the mortgage  origination
market and HomeSide's hedging needs. HomeSide is not able to estimate the timing
and  amount of cash  uses for  future  acquisitions  of other  mortgage  banking
entities, if such acquisitions were to occur.

Financing

Net cash used in financing  activities  for the quarter ended  December 31, 2000
was $72.0  million.  Net cash provided by financing  activities  for the quarter
ended December 31, 1999 was $485.6  million.  For the quarter ended December 31,
2000,  cash was used for the  re-payment  of  commercial  paper,  re-payment  of
borrowings from the HomeSide's line of credit,  payment of debt issue costs, and
dividends to the National. Uses of cash were partially offset by the issuance of
medium term notes. For the quarter ended December 31, 1999, cash was provided by
borrowings from the National and the issuance of commercial paper. Cash was used
to repay borrowings from the National,  commercial paper,  payment of debt issue
costs, and to pay dividends to the National.

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



Quantitative and Qualitative Market Risk

There have been no material  changes in the Company's market risk from September
30, 2000. For  information  regarding the Company's  market risk,  refer to Form
10-K for the fiscal year ended  September  30,  2000 of HomeSide  International,
Inc.


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<PAGE>


                           PART II - OTHER INFORMATION

ITEM 1.  Legal Proceedings

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

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


ITEM 6.  Exhibits and Reports on Form 8-K

(a)   No documents are filed as a part of this Report:


 (b)   Reports on form 8-K

HomeSide  filed no reports on Form 8-K during the  quarter  ended  December  31,
2000.







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<PAGE>


                                   SIGNATURES

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

                         HomeSide International, Inc.
                         (Registrant)

Date: December 6, 2001   By: /s/  Joseph J. Whiteside
                                 ------------------------
                                  Joseph J. Whiteside
                         Chief Executive Officer (Principal Executive Officer)



Date: December 6, 2001   By: /s/  Susan Lester
                                 -------------------------
                                  Susan Lester
                         Executive Vice President and Chief Financial Officer
                         (Principal Financial and Accounting Officer)






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