The First American Corp. announced today a merger of its First American Real Estate Solutions division with CoreLogic Systems Inc., a developer of mortgage risk assessment and fraud detection software.
CoreLogic and First American RES are both based in Sacramento, Calif. For the time being, the merged companies will maintain separate staff and operations, and continue to offer existing products and services under both brand names. The company is evaluating “a future transition to a unified brand,” The First American Corp. said in a statement.
George Livermore, currently president of First American’s Property Information and Services segment, has been appointed president of the new company. Steve Schroeder, formerly chief executive officer of CoreLogic, will oversee the mortgage risk analytics as executive vice president of risk management.
“There will be no change to your products and services or how your business is served. All contact information and office locations will remain the same,” Livermore and Schroeder promised in a letter to customers. “Our highest priority is to ensure that the merger is smooth for you and that you are comfortable and confident with our strategy of service continuity.”
In coming months, the merged company will provide customers with access to additional benefits, including new products, expanded technology infrastructure and enhanced business services, the letter said.
First American RES generated $252 million in revenue in 2006, more than three times the $74 million posted by CoreLogic. But the merger was the largest transaction in a series of acquisitions and minority investments First American RES has undertaken as a part of a larger domestic and international mortgage risk analytics strategy.
Since 2004, RES has acquired analytics companies LoanPerformance, UK Valuation and Basis100 and has purchased minority stakes in The Bohan Group, ComplianceEase, BasePoint Analytics and Australia-based RP Data. All provide mortgage risk management software including fraud prevention, collateral risk assessment, mortgage prepayment forecasting, regulatory compliance and due diligence reviews.
“This merger is a major milestone in our strategy to revolutionize the mortgage risk management process,” said Parker S. Kennedy, chairman and chief executive officer of The First American Corp. “This transaction unlocks value by creating a single, unified company with the unique data and predicative analytics resources that lenders, investors and consumers need throughout the mortgage lending and securitization process.”
The merger of First American RES and CoreLogic was undertaken through FARES LLC, a joint venture between The First American Corp. and Experian Group Ltd.
FARES LLC owns about 82 percent of the new, combined company, with CoreLogic shareholders owning the remaining 18 percent interest. CoreLogic shareholders also received $100 million, a payment financed by a loan to the new company secured by FARES LLC.
FARES LLC is 80 percent owned by The First American Corp., with Experian holding the remaining 20 percent interest in the company.
Founded in 1997, CoreLogic claims to be the leading provider of residential mortgage risk management and fraud protection technology and services to the U.S. mortgage banking industry. CoreLogic quantifies the risk in more than 25 percent of U.S.-based originations annually on behalf of its clients, identifying more than $1.2 billion in potential loan loss in 2006.
First American RES claims to be the largest provider of property and ownership information, analytics and services, with a database that covers more than 2,900 counties representing 99.1 percent of the U.S. population.