Prospective buyers of online brokerage E*Trade Financial Corp are haggling over the value of its weakening mortgage portfolio, the Wall Street Journal reported Monday in its online edition, citing sources familiar with the matter.

According to the Journal, rivals looking at its books recently are concerned that some of the assets haven't been marked to current values, people familiar with the matter said.

E*Trade is reportedly believed to have been in merger talks recently with Charles Schwab Corp and TD Ameritrade Holding Corp.

Analysts have previously said E*Trade will have to pursue strategic alternatives, such as a deal or sale of some assets, after large losses in its mortgage business.

Earlier this month, its shares fell almost 60 percent, hitting a 5-year low after the company withdrew a 2007 earnings forecast, projected further write-downs on a $3 billion asset-backed securities portfolio, and said the U.S. Securities and Exchange Commission had begun an informal inquiry into its loan and securities portfolio.

Representatives of the company could not immediately be reached for comment.

(Reporting by Justin Grant)

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