The players are new. The products are new. The strategies are new. In fact, it's an all new market.

Residential mortgage lenders. long accustomed to rapidly changing conditions, are scrambling to keep pace like never before.

The refinance boom that fueled record lending in 1993 has come to an abrupt halt because of higher interest rates. Instead of working the phones for homeowners interested in refinancing, lenders are calling on realty brokers to find buyers of homes. Instead of pushing fixed-rate mortgages. lenders are increasingly writing adjustable models, traditionally the most popular in times of higher rates.

With origination income on the wane, many lenders are looking to their servicing businesses for income. Servicing involves funneling monthly payments from homeowners to investors in mortgage-backed securities.

The roster of top players in that business bears only a faint resemblance to the lineups of five and 10 years ago. The No. I company, Countrywide Credit Industries. wasn't even in the top 10 in 1988. Now, its servicing portfolio is on track to pass $100 billion by late August roughly double the volume handled by the top competitor in 1988.

This special section of the American Banker lays out the key players in the new market.

The centerpiece of the section is seven pages of tables ranking the top 200 players in "total servicing," a broad measure that the newspaper began tracking last year. Total servicing includes both the mortgages that a company holds for itself and the loans it services for investors.

In all, these 200 companies handle more 60% of all outstanding home loans. Many of the companies are also leaders in originations, as shown in a separate table ranking originators.

Of course, the giants aren't the leaders in every market in the country. Very often a local bank or thrift is the top player. With that in mind, the section also includes rankings of community banks, small thrifts and credit unions.

In an accompanying story about small thrifts, one executive concisely sums up the views of his peers. "We don't feel threatened at all by the Countrywides." declares Robert Stoico, president and chief executive of First Federal Savings Bank, Fall River, Mass.

Such sentiment aside, it's hard to ignore the progress of the mega-lenders.

Perhaps the most remarkable performance has come from Norwest Mortgage, which powered into the No. 5 spot in servicing for investors, up from No. 160 in 1990. In total servicing, the Des Moines-based unit of Norwest Corp. finished seventh for 1993.

This is the "new" Norwest Mortgage, not the Norwest Mortgage that was a top servicer in the early 1980s. That company was disbanded in 1984 after suffering heavy losses on the secondary market, and the new company was built almost from scratch.

The effort focused first on originations, building a strong, nationwide retail network. Then the company turned up the heat in servicing, keeping an increasingly greater share of the servicing rights it produced. The result: Norwest's servicing portfolio more than doubled in each of the past four years.

"That act gets harder and harder to do." says Mark Oman, president of Norwest Mortgage. But the company is indeed planning to keep growing in servicing, and not just through originations.

In fact, the market is buzzing with reports that Norwest is about to buy $5 billion in servicing from fellow giant Prudential Home Mortgage. Neither company will comment.

Another newcomer to the top ranks of servicing is GE Capital Mortgage, long a leading provider of mortgage insurance. Last year, GE markedly boosted its position by acquiring Shearson Lehman Hutton Mortgage. And GE has steadily bought newly produced servicing rights from lenders around the country.

As a result, GE finished the year with a $65 billion portfolio, ranking No. 2 in servicing for investors and No. 4 in total servicing.

"We'll keep growing if the opportunities keep presenting themselves," says Stuart McFarland, GE's servicing chief. However, he said, the company plans to move cautiously. "We're going into an area where few have gone before," he said.

What's the point of getting big in servicing? For one thing, servicing offers a way to forge tight relationships with consumers and cross-sell other services.

"We're doing some of that and we hope to do more," said Norwest's Mr. Oman.

Moreover, servicing revenue can be a stable supplement to the often bumpy income from originations. And bigness in servicing generally brings efficiency, partly because large servicers can afford to invest in extensive computer equipment.

Angelo Mozilo, Countrywide's Vice chairman, says his per-loan servicing costs continue to fall, though not as rapidly as they did during earlier growth stages.

"The degree of improvement has diminished, but now we're going to force some more," he said.

Countrywide currently spends about $60 a year to service a loan, he said, down from $70 when the portfolio stood at $50 billion. Even in the unlikely event that the portfolio stopped growing, Countrywide should be able to lower the costs $45 per loan within 24 months, Mr. Mozilo said.

So what's in store as the mortgage industry presses onward? The best guess is that the big will get still bigger. As analyst David Dusenbury points out elsewhere in this section, plenty of consolidation is happening fight now

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