One of the most striking developments on the mortgage scene in 1995 was the decision by GE Capital Mortgage Services to stop originating residential loans directly to consumers.

For years, the Raleigh, N.C., company's hallmark had been its presence in virtually every aspect of the home loan business - insuring mortgages, servicing them, originating mortgages through correspondent lenders, and marketing loans directly to the public.

Its retreat in August was seen as an acknowledgement that GE Capital, despite its prowess in wholesale originations, had not grabbed enough business to be a force in the retail business. In the first half of 1995, retail loans accounted for only 7% of the company's originations, which totaled just under $1 billion.

"There are certain lines of business in which a company either has to become a major player or leave," said Rolland Johannsen, president of Furash & Co., a Washington-based consulting firm.

Mr. Johannsen said that, unlike banks, finance companies such as GE Capital don't have to worry that customers will leave if they can't choose from a wide array of financial services. In short, GE Capital has the luxury of picking the services it offers.

"Because they don't have to consider mortgage originations in terms of a customer relationship, it becomes a straight decision on how they will allocate capital," Mr. Johannsen said.

To be sure, GE Capital still casts a big shadow in the mortgage industry. The company continues to originate home loans through brokers and smaller lenders, and to sell mortgage insurance products. Also, it services a portfolio of loans that totaled $110 billion last June 30, second only to Norwest Mortgage.

A spokesman for GE Capital declined to comment for this report.

Industry observers said it's unlikely that many companies will follow GE Capital's lead.

"For most companies retail is the appropriate road because they control their own destiny in a very cyclical business," said David Lereah, chief economist at the Mortgage Bankers Association of America.

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