Fidelity Agrees to Buy Lenders Service, Inc. in Big Title Acquisition

The Alltel deal may have been Fidelity National Financial's biggest headliner of late, but don't forget about LSI.

In a deal the parties said would create "the best solution provider in the business," Fidelity National Financial Inc. announced its agreement to acquire Lender's Service Inc. in January.

The announcement billed Irvine-based Fidelity as "the largest provider of title insurance and real estate-related services" in the nation and called Coraopolis, Pa.-based LSI "the nation's largest appraisal management, residential title agency and closing firm."

MSN affiliate National Mortgage News reported Fidelity's interest in acquiring LSI on January 13. Terms of the deal were not disclosed, which was announced later, were not disclosed.

LSI is slated to continue operations uninterrupted at its suburban Pittsburgh location as part of Fidelity's National Lender Solutions group.

The acquisition adds a range of fulfillment services and products to complement Fidelity's 2002 purchase of loan origination software provider Eastern Software.

"The purchase of LSI signifies a major step toward Fidelity National's goal of building National Lender Solutions into a full-service provider to the mortgage industry," said Fidelity senior vice president Ron Frazier, the National Lender Solutions Division Manager.

Fidelity executive vice president Ernest Smith stressed that the major motivation for the deal is responding to lender demand for "a centralized point of entry offering access to an increasingly large variety of products, with one accountability." He said acquiring LSI "drastically increases our capacity and our skill sets" to meet that lender demand.

"This is a major focus for us," Mr. Smith stated. "As the HUD rules change, as the vendors move to bundled pricing and hybrid products - in other words, to any solution that any lenders require - our goal is to tailor make that for them, all the way to disposal of an REO.

"Right now," he continued, "when we look at the centralized lender focus that both LSI and Fidelity have, we are expecting $600 million revenue in that space."

"We certainly see the business model changing to the centralized process for major lenders as well as midsized companies," commented LSI president and CEO Bill Griffin. "And they are looking for solutions around those products, not just products." He said LSI stands to gain new customers, geographic reach and financial resources from the merger.

A major outcome of the merger will be creation of a full menu of collateral assessment products and services that include the proprietary AVM products of both companies married with LSI's huge conventional network of conventional appraisers and Fidelity's extensive BPO network, as well as the Solimar and Freddie Mac AVMs for which LSI acts as a reseller.

"The other thing it gives us," Mr. Smith told Mortgage Servicing News, "is potential pricing and cost advantages. Anyone trying to create something comparable from scratch would have to spread whatever money they get among their technology partners, but LSI will now outsource to FINIS, which keeps those revenues within the family."

LSI's appraisal, title and closing clients include 23 of the top 25 mortgage originators among its appraisal, title and closing clients. In business for the past 35 years, the company chalked up record 2002 revenue of $155 million in and over 460,000 appraisal, title and closing transactions.

Fidelity National Financial Inc. is a Fortune 500 company. Fidelity's title insurance underwriters - Fidelity National Title, Chicago Title, Ticor Title, Security Union Title and Alamo Title - issue 30% of all title policies nationally. The company also holds a majority interest in Fidelity National Information Services, a publicly traded subsidiary.

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