Large mortgage banks' servicing portfolios will mushroom during the next five years while small lenders scamper to find niches they can mine, a veteran industry executive predicted.

The handful of lenders each of which already services more than $100 billion of loans will see fourfold growth in the half decade, said Gerald L. Friedman, chairman of Amerin Guaranty Corp., a Chicago mortgage insurer. Mr. Friedman entered the industry in 1961 as an executive at Mortgage Guaranty Investment Corp.

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