First American Financial Corp., Santa Ana, Calif., is planning yet another acquisition of a mortgage information business.
The parent of St. Petersburg, Fla.-based First American Real Estate Information Services is buying Strategic Mortgage Services, Irvine, Calif.
Strategic owns the third-largest provider of mortgage credit information and the second-largest property appraisal company. The purchase would be First American's ninth mortgage-related acquisition since the beginning of 1995.
First American Real Estate Information's chief executive, John Long, said Strategic's strategy of providing all the different kinds of information that mortgage companies need mirrors First American's.
"This company should have been bought by someone who wants to compete with us," Mr. Long said.
First American's mortgage reporting unit, Credco, already was the largest in the industry. With the addition of Strategic's credit reporting division, First American's market share in this business would be about 30%.
But the addition of Strategic's appraisal business would benefit First American the most, Mr. Long said. The company purchased a small appraisal- services company last year that operated primarily on the West Coast.
"This gives us an immediate national presence," Mr. Long said.
Strategic's management will join First American, Mr. Long said, but the company hasn't decided exactly how to merge all of Strategic's operations with First American's existing businesses. Some of Strategic's divisions would be folded into another First American subsidiary, First American Title Insurance. Strategic also has a title division and settlement service, which provides title systems and accounting services.
Last year, First American Real Estate contributed 40% of its parent company's profits despite accounting for only 16% of overall revenues. And Mr. Long said the 40% should increase.
First American Real Estate also has a flood certification and field inspection business and owns Excelis, a system for mortgage servicers. Mr. Long said First American is satisfied with its mix of businesses and plans on focusing retaining customers from SMS and other companies it has acquired. But another purchase isn't out of the question.
"We're opportunists. We don't have a strategy to buy more companies, but we didn't have a strategy to buy SMS," Mr. Long said.
