JPMorgan, Wells Fargo lose share to small rivals JPMorgan With Wells Fargo Lose Share To Small Rivals

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Christopher Oltmann, a spokesman for PennyMac, declined to comment, saying he couldn't discuss the company's strategy until after it reports earnings. John Hoffmann, a spokesman for Nationstar which counts Fortress Investment Group LLC as its largest shareholder, also declined to comment.

Nationstar fell 1.4 percent to $33.17 at 9:48 a.m. in New York trading, extending its losses this year to 10 percent.

Ocwen has grown as banks including Citigroup and Bank of America retreat from the almost $10 trillion market for mortgage servicing rights, or MSRs, amid looming financial regulations that will force banks to pledge more capital for servicing rights they hold.

"We continue to view the big banks as an ongoing potential source of growth for our servicing business, both through MSR acquisitions and subservicing," Ocwen said in an emailed statement. "We are currently underleveraged and believe we have substantial access to additional capital to fund acquisitions."

Ocwen fell 0.4 percent to $52.55.

Refinancing Drop

Refinancings accounted for 75 percent of the $511 billion mortgages made in the fourth quarter of 2012, according to the MBA. That declined to 53 percent in the fourth quarter of 2013, and the trade association predicts it may decline to as low as 34 percent in 2015 as borrowing costs rise. The rate on 30-year mortgages averaged 4.51 percent last week, up from 3.35 percent in early May, according to Freddie Mac.

"The market has changed," said Keith Gumbinger, vice president of HSH.com, a mortgage data firm in Riverdale, N.J. "The refi market has dried up and because smaller lenders have become more active they are taking away share."

The refinancing business helped larger lenders because of their scale and the size of their mortgage servicing platforms, Rossi said. Wells Fargo and JPMorgan are the top two mortgage servicers, which handle billing and collections for loan payments. They will have to change their operations as the market shifts, he said.

Operational Inefficiencies

"The big guys benefit from a refi boom from a scale standpoint and now they have to go through some heavy restructuring to wring out operational inefficiencies as refis dry up," Rossi said.

Wells Fargo, which made almost 28 percent of all mortgages in 2012, announced more than 6,200 job cuts last year. Its share dropped to less than 20 percent in the third quarter. JPMorgan has said it could fire as many as 15,000 mortgage employees.

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