First American still will offer mortgage loans and service much of its own mortgage loan portfolio. Larger banks traditionally have provided third-party servicing of mortgage loans for other investors, in addition to their own loans. Changes in the mortgage servicing business have made it difficult for regional banks without significant third-party loan portfolios to compete. Companies such as Chase Manhattan Bank, Fleet Mortgage, Countrywide, and Wells Fargo currently rank among the largest servicers.
Servicing involves tasks such as collecting payments from borrowers and remitting to the investor.
The portfolio being sold by First American includes servicing rights on loans serviced by both First American and Deposit Guaranty Corp., which it acquired last year. Since that deal, First American's mortgage servicing unit has been based in Jackson, Miss., Deposit Guaranty's headquarters. The sale, being handled by Denver-based United Financial Inc., will eliminate about 70 mortgage serving jobs in Jackson. Those planned layoffs were included in the 1,400 being cut at First American as a result of its acquisition by Birmingham, Ala.-based AmSouth Bancorp. That amount is far above the proceeds the bank expects from the sale.