IBM to Purchase Wilshire Credit from BofA
[Update 1: adds announcement by IBM.] Global IT services giant IBM (IBM) is in the process of acquiring mortgage servicer Wilshire Credit Corp. from Bank of America (BAC), numerous sources with knowledge of the transaction confirmed to Housing Wire over the weekend. IBM confirmed the reports in an announcement late Monday morning that its mortgage servicing subsidiary signed an agreement with BofA to acquire Wilshire's core operating assets and to hire its approximately 900 employees. "The acquisition of Wilshire's assets further demonstrates IBM's commitment to delivering robust and innovative mortgage solutions during a difficult time for the mortgage industry," said Eric Ray, general manager of the financial services sector at IBM Global Technology Services. Ray added: "It also reinforces IBM's commitment to leveraging the full capabilities and resources of IBM to partner with our financial services clients in solving their most difficult challenges." Terms of the transaction were not being disclosed at the time of announcement, and IBM said the agreement is still subject to customary closing conditions. Word of Wilshire Credit's sale buzzed throughout the mortgage industry on Friday afternoon. The move initially stunned some long-time industry participants, who said that the deal was initially a "real head scratcher." But another source, a head of servicing at a mortgage servicer not involved in the deal, said that the IBM purchase was "indicative of an IT void that exists in the space." "IBM isn't coming into the servicing sector to be an 'also-ran,'" said the executive, who requested anonymity. "They clearly see an opportunity here to bring IT services into play." For Bank of America, the as-of-yet unconfirmed move may help lessen the complexity of integrating across numerous disparate -- and perhaps duplicative -- servicing platforms. Bank of America purchased Countrywide last year, making it the largest residential loan servicer in the country; in an exclusive interview earlier this year with HW, BofA mortgage chief Barbara Desoer acknowledged that while work was progressing on integrating the Countrywide servicing platform into BofA's operations, work had yet to begin on the same front at Wilshire. Bank of America acquired Wilshire Credit as part of its purchase of Merrill Lynch & Co. last winter. Wilshire Credit gives IBM a highly-rated special servicing platform with significant capacity to grow, sources told HW. Fitch Ratings has assigned Wilshire Credit its highest ratings for servicing subprime and defaulted loans, citing in particular the servicer's "extensive workout capabilities" in a recent August 2009 review of the Beaverton, Oregon-based company. Paul Jackson is the editor-in-chief and publisher of Housing Wire and Housing Wire magazine.