Alltel Hurt by WaMu Plans?
Ever since Washington Mutual here announced that it would buy HomeSide Lending and its $150 billion servicing portfolio, Alltel has known that one of its best servicing customers might disappear.
As one WaMu insider put it, "We bought them because of their servicing system."
The "servicing system" is a reference to an in-house servicing technology platform and related software that was being built by HomeSide when National Bank of Australia, HomeSide's parent, decided that it had had enough of the U.S. mortgage market.
The HomeSide servicing deal closed in October, but according to sources both in and outside the company, the key question has now become: just how fast can WaMu put all of its $743 billion in housing receivables on the in-house system?
One WaMu official told Mortgage Servicing News that the goal is to complete the servicing platform conversion by the end of 2003.
WaMu has a servicing market share north of 12%, which means that the company probably services about 12% of the nation's $6.1 trillion in outstanding residential loans.
For the Jacksonville-based Alltel, it's a huge client and a huge contract for its mortgage information services division. (HomeSide is also based in Jacksonville, Fla.)
One Alltel official noted that "WaMu is an important client. We do mortgages for them, servicing, collections, retail, data warehouse and platform/teller."
One consultant, requesting his name not be used, said that WaMu's conversion will hurt Alltel's servicing business, but it's hard to say by how much.
It's also unclear that when WaMu converts over, whether it will still use Alltel for other vendor-related services.
Another Alltel official, requesting his name not be used, told MSN, "WaMu is giving us no confirmation of their business strategy."
Another issue tied to all of this is whether Alltel's parent in Little Rock, Ark. will sell Alltel's mortgage business.
One investment banker said the parent has considered selling its mortgage division in the past, "but it was never anything formal."
Recently, rumors were circulating in the industry that Fidelity National Financial, Irvine, Calif., might consider making an offer for Alltel's mortgage unit.
An Alltel spokesman in Little Rock said, "We don't respond to rumors and speculation." Fidelity National executives could not be reached for comment.
If Alltel does decide to sell its mortgage information division, it might fetch at least $1.7 billion for the unit.
In an article in National Mortgage News in late December, technology consultant Jeff Lebowitz of MorTech suggested that Fiserv might want to buy Alltel's mortgage business, but Mr. Lebowitz later clarified that he has no knowledge of Fiserv being officially interested.
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