You can take big home lenders their word. Last year, a swarm big-volume lenders predicted it they would grab greater market share should the mortgage industry shrink.

Now a study released last week by SMR Research Corp. shows that most of the big originators did what their honchos promised.

"We were surprised to see a number of companies, not all, but several actually do it," said Stuart A. Feldstein, SMR's president and author of the study, "Giants of the Mortgage,Industry."

The Budd Lake, N.J., research company's annual comprehensive look at lending found that, as a result, the 25 largest residential lenders have a hand in more loans than ever before.

According to Mr. Feldstein, no mortgage company had a market share greater than 5% last year.

Now a handful do. Among them are Countrywide Credit Industries and Prudential Home Mortgage Co., a unit of Prudential Insurance Co. of America.

According to the study, it was also the greater ability of large lenders to buy loans from other mortgage banks that propelled them to improved market shares amid today's much-reduced volume of loan originations.

Top-25 lenders now originate or buy more than half of all loans in America - a record - according to the study.

GE Capital Mortgage's loan production grew 245% last year, according to the study.

"Not too bad for a company that claims it was not a competitor," Mr. Feldstein said.

Other top-25 mortgage banks have also been chewing up more market share recently.

In the first six months of this year, the group had a hand in 51% of all loans, or $154 billion. In 1992, the top lenders took part in just 39% of the nation's mortgages.

"I call that a fairly sizable trend," Mr. Feldstein said.

How are they doing it? Consolidation is a big reason, he said.

Mr. Feldstein said he and others in the lending industry were "flabbergasted" by its lightningfast consolidation in recent months.

"The whole industry is standing with its mouth wide open because of the pace of the acquisitions," he said.

Besides GE Capital's purchase of Shearson Lehman Hutton Mortgage Corp., monumental purchases by Chemical Bank, Bank of America, and Mellon have tightened the pack of leading lenders, he said.

Consolidation will wound smaller competitors greatly, he said. He said bigger lenders will have the lower cost of funds to severely undercut little-league mortgage banks.

"It is going to be a tougher world for smaller competitors," Mr. Feldstein said.

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