First American Financial and Experian to Form New Company

First American Financial Corporation and Experian Group announced in September that they will merge their respective real estate information subsidiaries into a new company. First American will own 80 percent of the new company and Experian will own 20 percent. Other businesses of the respective companies, including Experian's credit division and First American's title insurance operations, will not be part of this transaction.

The combination of First American Real Estate Information Services, Inc. (Information Services) and Experian's Real Estate Solutions (Experian RES) will be the nation's largest and most diverse provider of information technology and decision support solutions for the mortgage and real estate industries. It will have annual revenues of more than $450 million and a combined staff of 4,000. This venture will combine RES's property data and title information services with all of Information Service's businesses, with the exception of Excelis, Inc., the mortgage loan servicing software division.

The transaction is expected to close by year end. The new company will be headquartered in St. Petersburg, Florida, the current headquarters of Information Services.

In making the announcement, Parker S. Kennedy, president of First American Financial, said, "The combination of our two organizations will redefine the mortgage lending services industry. First American is already the leading provider of real estate-related financial and information services. Experian RES is our primary information supplier and a recognized innovator of automated valuation and real property database products. This is an extraordinary marriage of two very compatible companies, providing a unique opportunity to combine the biggest property raw data provider with the biggest repackager and reseller of property information. The efficiencies will be substantial."

Experian RES is America's foremost supplier of core real estate data, providing, among other things, property valuation information, title information, tax information, and imaged title documents. First American's appraisal, tax service and title businesses, together, make it Experian RES's largest customer. First American CREDCO, which will be a part of the new company, is the nation's largest provider of mortgage credit information and a large Experian consumer credit customer.

"This is an opportunity to accelerate our transformation from a data supplier to an integrated solutions provider," said D. Van Skilling, chairman and CEO of Experian North America. "We look at this as a wonderful opportunity to expand our commitment to the real estate industry. Our new company will have significant economies of scale, a total focus on a single market and two financially strong parents-all of which will enable us to do more for clients."

There are three categories of business that will be especially impacted by the combination of these two companies: appraisal, tax servicing, and title services.

Appraisal: Experian RES maintains the nation's largest property database and provides comparable sales, tax and assessor's map information used in the production of electronic appraisals; First American is the second largest appraisal provider in the country.

Tax Servicing: RES provides tax information to tax service companies, Realtors and title companies; First American operates the second largest national tax service company and also provides tax information to title companies.

Title: RES is the number one operator of title plants with the largest repository of imaged title documents; First American is the leading title insurance company in the U.S.

The new company will also take over the operations of Information Services' credit reporting, flood compliance, field inspection and mortgage document preparation services.

John Long, president of Information Services, will be president of the new company. "With the combination of these two powerhouses, we will deliver an unparalleled level of services and technology that will enhance lender efficiency today, and develop new products and electronic commerce solutions for the future," Long said.

First American Website Hosts 1031 Exchange Course

First American's short course on 1031 exchange practice may now be viewed on our Website (http://www.firstam.com) look for News and Reference - look for "Tax Deferred Exchanges - Internal Revenue Code §1031").

The entire course, originally designed as a slide or Powerpoint presentation, is now online. The online version includes frequently asked questions and answers.

This course has been well received. It covers the history of §1031, including the landmark Starker decision upholding the delayed exchange concept, as a means to best understand the rules and regulations enforced by the IRS today. It also describes a typical exchange, step by step.

Groups interested in the "live" presentation may contact a local First American representative, or Albert Rush at Home Office (E-mail: brush@firstam.com).

New Property Disclosure Report Now Offered in California

Growing awareness of federal, state and local disclosure laws affecting sales of residential properties has created demand in California for a new product, the Property Disclosure Report. These reports provide realtors and their clients with otherwise hard-to-get information, such as inclusion of given property within an Alquist-Priolo Earthquake Fault Zone, Seismic Hazard Zone, State Responsibility Area (Fire), FEMA Special Flood Hazard Area, and Mello-Roos Community Facilities District.

If a property is located in any of these zones, this must be disclosed to a buyer. In addition, many county and municipal governments have developed their own set of required disclosures. These vary throughout the state, but can include additional earthquake and seismic information, high fire hazard areas, avalanche zones, endangered species habitat areas, proximity to nuclear power generating facilities, and special benefit assessment districts, to name a few.

In the past, many real estate agents have either: 1) obtained and interpreted the hazard maps themselves, and filled in the statutorily-mandated Transfer Disclosure Statement accordingly (taking on liability for their answers), 2) relied on memory(or a colleague's memory) to know if a property was in a particular zone, and filled in the Transfer Disclosure Statement accordingly (more liability), or 3) ordered the report from a third party (who may or may not be financially responsible).

Now title companies have gotten into the disclosure business, with First American the forerunner. These reports are delivered quickly (usually within 24 hours), are inexpensive (maximum cost of $75) and, most importantly, relieve the Realtor of liability because First American provides reliable information in a format with defined and limited liabilities.

How does First American obtain the information? First American Property Data Services, Inc., has partnered with the world's leading provider of natural hazard risk assessment information, Risk Management Solutions of Menlo Park, California. RMS provides natural hazard information with the exception of flood. Flood hazard information is obtained from First American Flood Data Services, located in Austin, Texas. Mello-Roos information is obtained from local county offices. All of this, including ordering and report delivery, is done electronically.

This new product is growing to meet market needs. Most recently First American has begun offering buyers of Property Disclosure Reports a collection of five booklets with each order.

These booklets provide information on earthquake safety, asbestos, lead-based paint, radon and indoor air quality. As client and Realtor needs continue to change, First American will continue to look for ways to provide helpful products and services.

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