First American Financial Corp., Santa Ana, Calif., is buying Residential Information Services, a servicing software company that is one of the final pieces of Prudential Insurance Corporation of America's mortgage operation.
The technology unit has a tattered history. Prudential bought it from ailing Lomas Financial Corp. in late 1994. Three months later, Prudential put its whole sprawling mortgage operation up for sale, to focus on its core businesses.
John Long, president of First American's real estate unit, said his company first looked at the unit when Lomas was trying to sell it. But First American couldn't do the deal back then, he said.
He would not reveal the price in the current deal.
Mr. Long said First American would expand the unit, which currently serves seven companies, with a total of 250,000 loans.
"We have a strong commitment to the business, even if we have to lose money on it for a few years," he said.
The unit will remain in Dallas, and will be renamed Excelis Inc., after the software product it offers. Mark Brisebois, currently chief information officer of First American's real estate unit, will run it.
First American will have an uphill battle reestablishing its credibility and going up against the industry leader, Computer Power Inc., said a source familiar with Residential Information Services. The unit had a strong reputation for technology and efficiency, but never accumulated enough volume to be profitable - and some business went out the door because of uncertainties over its future.
Lomas Mortgage USA had its loan servicing on the system, even after Prudential bought it. But when First Nationwide Bank bought Lomas's servicing assets in January, it moved the servicing to Computer Power's system. First Nationwide is currently in the last month of the conversion process, according to a spokeswoman there.
A preliminary agreement has been reached for the sale of the remaining piece of Prudential's mortgage unit, Lender's Service Inc., a data base for property appraisers, according to someone close to the deal. A final agreement should be reached in the next week. If the deal goes smoothly, it should close by May or June, the insider said. The buyer's identity is unknown.
The largest unit of the mortgage company, called Residential Services Corporation of America, is Prudential Home Mortgage. Pru Home, the loan- origination unit and largest of the three pieces, was bought by Norwest Mortgage Inc. in January.