International Business Machines Corp., which provides a host of outsourced services to mortgage lenders, now wants to take on one of the toughest jobs in the business — servicing distressed loans.
The Armonk, N.Y., vendor said Monday that it has agreed to buy the servicing platform of Wilshire Credit Corp., a Beaverton, Ore., servicer that specializes in troubled mortgages, from Bank of America Corp.
The Charlotte company inherited Wilshire in its Jan. 1 purchase of Merrill Lynch & Co. B of A had already picked up Countrywide Financial Corp. the largest servicer of any kind of home loans, last year.
Wilshire was "redundant with the capabilities we already had," said Jackie Fitzgerald, a spokeswoman for B of A, so the company decided to explore a sale.
IBM did not say how much it would pay for the Wilshire assets and its 900 employees. (Merrill bought Wilshire in 2004 for about $48 million.) The deal is expected to close in the first quarter, Fitzgerald said.
Eric Ray, the general manager for the financial services sector at IBM, said in a press release that the deal "reinforces IBM's commitment to leveraging [its] full capabilities and resources … to partner with our financial services clients in solving their most difficult challenges."
IBM provides back-office services, like underwriting and document preparation, to lenders including Coastal Federal Credit Union of Raleigh, N.C. and Tree.com Inc.'s LendingTree Loans. Since March IBM also has offered behind-the-scenes help with modifications of troubled loans.
Bank of America would keep the servicing rights on the roughly 127,000 loans in the Wilshire portfolio, whose balances total about $18 billion, Fitzgerald said. Servicing of these loans would be transferred to the banking company's main platform, she said.
B of A inherited another subprime servicer from Merrill — Home Loan Services in Pittsburgh. Fitzgerald said the company has no plans to sell this outfit, which it expects to integrate with the rest of its servicing operations by the third quarter of next year.