First American Financial Corp. is hoping that large mortgage banks will be less wary of its recently acquired Excelis mortgage-servicing system now that it is in steadier hands.
Excelis started out as a part of the now-defunct Lomas Financial Corp. and was sold to Prudential Insurance Company of America in 1994. But soon after, Prudential decided to exit the mortgage business. It sold its mortgage banking business this year to Norwest Corp.
First American bought Excelis from Prudential in June. At that time, Excelis was part of a unit called Residential Information Services. First American renamed the unit Excelis Inc.
What First American calls the only real-time, on-line servicing system on the market has long been well regarded for its efficiency and advanced features. But neither Lomas nor Prudential was able to attract enough high- profile customers, and as a result they could not wrench consistent profits from the unit.
John W. Long, president and chief executive of First American's real estate information services subsidiary, said that when the company was considering a purchase of Excelis, it felt the system was an "undervalued asset" that would do much better with a financially stable parent.
First American has already signed up one major servicer to use Excelis. GMAC Mortgage, the General Motors Corp. affiliate that is the nation's ninth-largest servicer, with a portfolio of $60 billion at midyear, announced in October that it would use Excelis to service all the loans in its portfolio.
As for the unit's profitability, Mr. Long said, he "can see the light at the end of the tunnel" and is expecting Excelis to be in the black by 1998.
Three or four more deals could be signed in the next year, he added, and the consolidation trend in the servicing industry will especially benefit Excelis since the system caters to larger servicers.
First American, moreover, has a host of real estate services that Mr. Long said it can cross-sell.
"The idea of having one reputable vendor absolutely sells," Mr. Long said. He added that it would probably take a few years before First American would be able to package all its services in one "blockbuster"- type product.
The one-stop-shopping approach seems to be working already. Mike O'Brien, president and chief executive of GMAC Mortgage, said one reason it chose Excelis was because it already uses First American's credit, title, and tax services.