WASHINGTON — The nation's top five residential servicing firms now control almost 67% of the housing debt in the United States — another sign that consolidation in the struggling industry is rampant, and that these institutions might be considered "too big to fail."

According to survey figures compiled by National Mortgage News and its Quarterly Data Report, the dollar value of loans for which the five companies owned the servicing rights increased 27% last year, to $6.513 trillion at yearend.

Their combined market share rose roughly 11 percentage points in that time, to 66.94% at yearend.

At the end of 2006 the five companies had a combined share of 52.92%, a figure that might have indicated consolidation was not picking up much speed. But the nation's credit crisis — which started with subprime mortgages and housing — is causing a shift in the servicing sector, creating a situation where just a few companies control so much.

The huge increase in market share among the five largest servicers was made possible by several "shotgun" mergers and acquisitions where the strong bought the weak, with regulators carefully reviewing the deals.

For instance, Wells Fargo & Co., the nation's second-largest servicer, bought the ailing Wachovia Corp., and JPMorgan Chase & Co. purchased the banking operations of Washington Mutual Inc. of Seattle. Before the acquisitions Wachovia and Wamu were top 10 servicers, with combined one- to four-family balances of almost $800 billion.

At yearend Bank of America Corp. ranked first among all servicers, with a 21.13% market share. Its housing receivables nearly quadrupled last year, to $2.056 trillion. The Charlotte company catapulted to the top of the heap as a result of the July 1 purchase of Countrywide Financial Corp., once the nation's largest mortgage lender. Unlike other deals, the Countrywide acquisition was not assisted by federal regulators.

Wells had $1.7 trillion of residential servicing rights at yearend; including commercial servicing, it had more than $2 trillion.

National Mortgage News also found that the top 15 servicers, as a group, increased their receivables 51% last year. The top three firms — B of A, Wells, and JPMorgan Chase — recorded a growth rate of 93%.

The results are based on surveys National Mortgage News sent to 200 firms engaged in mortgage banking.

The figures include all loan types and both first and second liens.

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