The Rebuilding of MSP: When Fidelity Bought ALLTEL's Servicing Platform, It Got Top Market Share in the Servicing Technology Marketplace-And an Industry Software Utility in Bad Need of a Rewrite
Grant, Rick, Mortgage Banking
WHEN FIDELITY NATIONAL FINANCIAL INC. (FNF), Jacksonville, Florida, emerged as the high bidder for the mortgage servicing technology assets of communications giant ALLTEL Information Services, Little Rock, Arkansas, it turned a few heads. It wasn't just the billion-dollar-plus price tag.
The market leader in the servicing platform business with its Mortgage Servicing Package (MSP), ALLTEL provided the technology to service about half of all the loans in the country, and had been providing it for nearly 30 years. But at the time of the deal, the firm's biggest clients--including Wells Fargo and Washington Mutual (WaMu)--had decided that the old COBOL-based program would not meet their needs in the future, and they were preparing to jump ship, according to Ernie Smith, president of Fidelity Information Services Inc. (FIS), Jacksonville, Florida, the division the company would create around the ALLTEL assets. It may have been just a matter of time before MSP's other users reached the same conclusion.
But that's not the way FNF's top management saw the situation.
Fidelity had been gently expanding out of its core title insurance business for some time. It had already entered the credit and flood insurance businesses by the time it bought rival Chicago Title Insurance Co. and became one of the largest settlement-services companies in the mortgage industry.
By the time the ALLTEL deal presented itself, the company was into everything from multiple listing service (MLS) software to loan origination systems to default outsourcing. It owned Hansen Quality and Lenders Service Inc., and was in the process of building a $40 million data center in Chicago to house its new in-house information technology (IT) team. All together, the company was operating 37 companies in the real estate and mortgage lending industries.
"When we found out [ALLTEL] was for sale, we thought that it would be the next step," says Smith. "Not only is it a nice, stable business, but we thought we could get it at a good price because the word on the street was that ALLTEL had not re-architected its system and was on the verge of losing many of its customers to Fiserv [MortgageServ]."
In effect, it was a turnaround play. Fidelity was gambling that it could stop the hemorrhaging in time to convince …
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Publication information: Article title: The Rebuilding of MSP: When Fidelity Bought ALLTEL's Servicing Platform, It Got Top Market Share in the Servicing Technology Marketplace-And an Industry Software Utility in Bad Need of a Rewrite. Contributors: Grant, Rick - Author. Magazine title: Mortgage Banking. Volume: 65. Issue: 11 Publication date: August 2005. Page number: 50+. © 2009 Mortgage Bankers Association of America. COPYRIGHT 2005 Gale Group.
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