A mortgage processing company's failure to find a buyer during the “shopping” period to sell its business could be a reflection of the still-risky mortgage industry, an industry analyst has said.
Lender Processing Services announced yesterday it found no other buyers for the company, one of the leading outsourced mortgage fulfillment providers. It previously announced at the end of May that if it couldn’t find a buyer during the set period - which ended Monday - it would merge with Fidelity National Financial, a provider of insurance, mortgage and restaurant services.
LPS still has ongoing litigation and “robo-signing” issues for the role it played in the foreclosure crisis, according to a mortgage technology analyst who asked not to be named. Those could have been factors in its inability to find another buyer besides FNF, he said, but it was more likely a reflection of rising mortgage rates and still shaky regulatory environment for the mortgage industry.
Rising rates will eliminate certain businesses, such as refinance, for example, which would reduce the industry’s overall need for mortgage fulfillment services in refinance and therefore lower LPS’ overall earnings, the analyst said.
It appears LPS’ announcement will move the company one step closer to merging with FNF. Its core services are not expected to change, but it will have stronger capital backing than before, the analyst said.
LPS has declined to comment.