Mortgage lenders absorbed the news of the largest thrift merger in history with reactions ranging from bravado to unabashed fear.

The $9.9 billion deal for H.F. Ahmanson & Co., unveiled Tuesday, would make Washington Mutual Inc. the nation's fourth-largest mortgage servicer. And it would vault to first place among originators in California, the country's largest and richest mortgage market, where BankAmerica Corp. currently leads the pack.

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