Through its recent merger with Chemical Bank, Chase Manhattan leapfrogged from No. 7 to No. 3 among mortgage servicers. At midyear, the bank processed principal and interest payments on $136 billion in home loans.

And Chase smells more opportunity in the fragmented servicing business.

"We intend to continue to grow," said Steve Rotella, executive vice president of Chase Manhattan Mortgage Corp. "It's a good business for us, it provides good return and cash flow, and there is a lot of opportunity for continued consolidation."

By yearend, and Chase will service $140 billion in mortgages to over 1.6 million borrowers, Mr. Rotella said.

The mortgage company is still knitting together its new servicing business from the separate Chase and Chemical pieces. The combined loan portfolio will be serviced at two facilities - in Columbus, Ohio, and Monroe, La., Mr. Rotella said.

The Columbus facility belonged to Chemical and the other to Chase. Another Chase servicing center in Tampa, Fla., will be phased out, Mr. Rotella said.

Before the merger, Chase serviced about $80 billion in home loans, and Chemical about $60 billion.

So, is the new portfolio too big to manage?

"We believe that if you plan things out properly and size your systems properly, you can manage a portfolio of half a million, a million, 2 million loans," Mr. Rotella said.

"There was a time years ago when people used to say 300,000 loans was too big, or 500,000 loans," he said. "We're servicing today 1.6 million loans, and it doesn't feel unmanageable to me."

Chase is positioning itself to service 2 million loans, he said.

With such volume, runoff is large, Mr. Rotella said, but Chase replenishes the portfolio through internal production, the purchase of servicing packages, and recapturing customers who refinance.

As at other banks, Chase places a premium on cross-selling other products to its mortgage customers, but Chase has not sufficiently mined its rich data base, Mr. Rotella said.

"We are doing as well as most others, and slightly better, but it is an area that has a lot more potential," he said. So far, Chase mostly has sold homeowner and disaster insurance to its mortgage customers, but it also plans to use its brand name to market other financial products, he said.

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