EXHIBIT 11.1
 
                          HEADLANDS MORTGAGE COMPANY
 
           STATEMENT RE COMPUTATION OF PRO FORMA PER SHARE EARNINGS
 


                                                                    FOR THE
                                                                  THREE MONTHS
                                                                     ENDED
                                                                   MARCH 31,
                                                                  ------------
                                                                      1998
                                                                  ------------
                                                               
  Basic and diluted pro forma income per share:
    Pro forma net loss to common Stockholders(1)................. $ (9,728,110)
                                                                  ============
    Weighted average shares outstanding(2)--basic................   17,284,746
    Weighted average shares outstanding(2)--diluted..............   17,284,746
    Pro forma earnings per share--basic..........................        (0.56)
                                                                  ============
    Pro forma earnings per share--diluted........................        (0.56)
                                                                  ============

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(1) Prior to January 31, 1998, the Company was treated as an S corporation for
    federal and state income tax purposes. The pro forma presentation reflects
    the provision for income taxes as if the Company had always been fully
    subject to federal and state taxes as a C corporation at the effective tax
    rate of 42%. The pro forma presentation also reflects the one-time, non-
    cash charge relating to deferred income taxes on historical earnings
    resulting from termination of the Company's S corporation status.
 
(2) No shares related to the Company's stock option plan were included in the
    weighted average number of shares outstanding, as their effect would have
    been anti-dilutive for the period presented.