An analyst who raised his rating on Lender Processing Services Inc. said fears that government efforts to increase mortgage modifications would harm the company's default services business are "overdone."

Such concerns have been "the main driver" of a recent fall in the mortgage technology provider's shares, Nathaniel Otis, of KBW Inc.'s Keefe, Bruyette & Woods Inc., said in a research note Monday.

He raised his rating on the company to "outperform," from "market perform."

However, "the pipeline of default business should remain strong into 2009 and 2010 regardless of" government action because "it can take upwards of a year to move from" default to completing the sale of a foreclosed property, he wrote. "Second, it is unclear whether loan modifications truly cure delinquent loans or whether they may simply delay the process in some instances."

Mr. Otis also argued that "government intervention should help support the longer-term health of the real estate market and, in so doing, strengthen the company's mortgage processing business."

He lowered his price target for the company to $33, from $37. Its shares closed at $23.06 Monday.

Fidelity National Information Services Inc., a Jacksonville, Fla., banking technology vendor, spun off Lender Processing in July.

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