First-quarter mortgage servicing and origination numbers show an industry whose top players continue to increase their shares of a booming market, often through consolidation.

The boom in refinancings sent origination volume for the top 25 lenders soaring to $252.6 billion, up 108% from the same period last year.

Mortgage rates, after topping out at 8.82% for a 30-year fixed-rate loan in May of last year, fell below 7% in early January and have remained around 7% for most of this year, according to HSH Associates. As a result, the industry has emerged as one of the few strong sectors in the economy, gorging itself on borrowing demand and hiring every able-bodied mortgage professional in the market.

On the servicing side, the top 25 continued to add assets during the first three months of the year, boosting their combined portfolios 18%, to $2.8 trillion.

Results for the quarter also show consolidation picking up speed. The top 10 lenders held 45.4% of the total market and 70% of the top 25's share; the top 25 originated close to 64% of all mortgage loans.

The portfolios of the top 10 servicers grew an average of 25% from the year before. The top 10 held more than 48% of the total market and more than 90% of the top 25's share, up from 85% the year earlier.

Washington Mutual Inc. led the first-quarter consolidation wave, closing its purchase of Bank United and initiating a deal for Fleet Mortgage Corp.

Other deals contributing to the consolidation included Chase Manhattan Mortgage Corp.'s purchase of Advanta Corp.'s mortgage unit, Citigroup's acquisition of Associates First Capital, Wamu's purchase of PNC Mortgage, and Wells Fargo Home Mortgage's numerous servicing-related buys, such as the portfolios of GE Capital and First Union Corp.

Further, Wamu announced Monday that it has agreed to buy Dime Bancorp Inc., which owns North American Mortgage, the No. 14 servicer and No. 9 originator, according to first-quarter numbers compiled by National Mortgage News, a sister publication of American Banker.

Adding the origination and servicing totals of Fleet Mortgage to Wamu's - the deal closed in the second quarter - would have put the Seattle-based thrift company atop both the servicing and origination lists in the first quarter.

If the Dime deal goes through, Wamu's lead in both categories would become truly commanding. In the first quarter the two companies' combined figures, with Fleet's, would have added up to a $512 billion servicing portfolio and $42.3 billion of originations.

Trailing Wamu in originations would have been Chase at $31.9 billion, Wells Fargo at $28.8 billion; Countrywide Home Loans at $23.8 billion, and Bank of America Mortgage with just more than $17 billion.

In servicing, the runners-up to Wamu would have been Wells Fargo at $455.5 billion, Chase at $392.4 billion, Bank of America Mortgage with $337.8 billion, and Countrywide at $295.7 billion.

Keith Gumbinger, president of HSH Associates, said the first-quarter data were no surprise. "A year ago rates were going up into the 8% range," he said. "You're comparing a time when rates have been low and stable versus a weak, rising-rate environment. The numbers should definitely look better this year."

Indeed, the top 10 lenders saw their loan volume jump an average of 141% in the first quarter from the year earlier. Applications for refinancings accounted for about 50% of all loan requests after falling to less than 10% of applications during the last year. Home sales also powered the quarter. In fact, extending the period out a month, they reached their highest level for the first four months of any year ever, said Orawin Velz, an economist at Fannie Mae.

In addition, she said, home prices rose almost 9%. In her view, this and the refinancing boom made the sector's big volume numbers all but inevitable.

"When you look at record-high home sales volume, very high price appreciation, and fixed [mortgage] rates that have declined to below 7%, of course you're going to get big originations," Ms. Velz said.

Craig S. Davis, president of Washington Mutual Home Loans and Insurance Services Group, said he would not be surprised "to see the top handful of players grow in market share" over the next five years, but he argued that the industry remains split among a host of smaller players.

Mr. Gumbinger said the small companies are still there but the midsize ones are not. There used to be plenty of them, mainly banks and thrifts, crowding under the top four or five players, he said. But during the past decade the biggest companies pushed down into the middle rankings.

Now, Mr. Gumbinger said, the market is "barbell-shaped" - "you've got very big, jumbo guys at one end, nobody in the middle, and lots of small guys at the other end." But the top lenders cannot keep growing, he said, if only because they will run out of properties to buy.

Mr. Gumbinger cited Washington Mutual's track record. Wamu "bought virtually everyone that Norwest and Wells Fargo didn't," he said.

Norwest first went on a mortgage-bank buying spree, he said, and then bought Wells Fargo, leaving Wamu to buy what was left. "That leaves you with the question: How much bigger can the big guys get until there's only one big guy left?" he asked.

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