Two leading suppliers to the banking industry are about to snap up key pieces of Prudential Insurance's huge mortgage unit.
Well-placed sources said Electronic Data Systems Corp. is the front- runner to buy Residential Information Services, a Prudential unit that provides computer support to mortgage servicers.
Mortgage Guaranty Insurance Corp., meanwhile, is nearing an agreement to buy Prudential's property appraisal company, Lender's Service Inc., according to the sources.
Though the appraisal and computer units are not the largest parts of Prudential's mortgage operations, they would help MGIC and EDS carry out strategically important expansions in the mortgage area.
EDS, based in Plano, Tex., is a pioneer in outsourcing, providing financial institutions with check processing and funds transfer services. Last May, an official said the company was preparing to "reshape the mortgage industry." The well-regarded Prudential unit would clearly play a role in that effort.
MGIC is one of the nation's largest mortgage insurers, offering lenders protection against defaults. By acquiring Lender's Services, it would be able to offer its clients another important service - property appraisals. Lender's Services manages a nationwide network of appraisers.
Prudential Insurance Company of America placed its home mortgage operations on the auction block in March, as part of an effort to bolster capital. The unit, Residential Services Corporation of America, became the largest mortgage company ever put up for sale.
An spokeswoman confirmed that EDS was interested in the Prudential computer-support unit but said she had not been notified of an agreement. Representatives of Prudential and MGIC declined to comment.
As previously reported, First Union Corp. and Norwest Corp. are in line to divide Prudential's main mortgage asset - an $80 billion mortgage servicing portfolio.
Those deals are expected to total about $1 billion. The prices to be paid by MGIC and EDS could not be learned.
First Union, sources have said, is planning to buy the rights to service some $38 billion in jumbo mortgages - loans larger than $203,150. In addition, First Union is negotiating to buy Prudential's jumbo "conduit," which acquires loans from other lenders and repackages them as securities.
The servicing acquisition will bring First Union into the top 10 servicers of home mortgages.
The deal that Norwest is pursuing, sources say, would make the Minneapolis-based company the largest servicer of home loans. Norwest is also expected to purchase Prudential's lucrative affinity lending operation and corporate relocation lending program.
Meanwhile, details are starting to surface about the future management of the businesses that are being spun off from Prudential.
K. Terrance Wakefield, a top mortgage executive who retired from Prudential in 1993, would run Lender's Services under MGIC, sources said.
And the conduit that First Union is seeking would headed by Roy K. Kasmar, currently a managing director at Prudential's mortgage operations.
