NEW YORK (CNN/Money) - Washington Mutual Inc. said it will acquire the mortgage portfolio of National Australia Bank's HomeSide Lending unit for about $1.3 billion in cash and $735 million in debt.

Seattle-based Washington Mutual (WM: down $0.40 to $37.12, Research, Estimates) added that it expects the purchase to be modestly accretive to earnings in 2002 and to close in the fourth quarter the year.

Under the agreement, Washington Mutual will buy HomeSide's parent company, SR Investment Inc., and its assets which include mortgage servicing rights on a mortgage portfolio worth about $131 billion.

National's foray into the U.S. mortgage lending business proved a disaster for the bank, which last year was forced to reduce the book value of Jacksonville, Fla.-based HomeSide by $2 billion.

Last December, National, also Australia's largest bank, sold HomeSide's mortgage business and all its operating assets, including its technology, infrastructure and employees, to Washington Mutual for $2 billion.

Under that deal, National retained HomeSide's mortgage portfolio.  

-- from staff and wire reports