First American Financial Corp., completing one of its biggest acquisitions, bought the real estate tax services division of bankrupt Westwood Equities Corp. on Monday for $28 million in cash.
The acquisition of TRTS Data Services Inc. and its merger with First American’s much smaller, 3-year-old tax service subsidiary gives the title insurance holding company the nation’s second-largest tax service operation.
The merged entity will take the name of the company’s unit, First American Real Estate Tax Service Inc., and will be headquartered at TRTS offices near Los Angeles International Airport.
“We’re really excited about the acquisition,” said Parker S. Kennedy, executive vice president of the Santa Ana holding company.
“We’ve known about TRTS for many, many years, and we’ve observed it as a competitor very often in the last three years. It’s always been a strong competitor with good people,” he said.
Tax service companies track delinquent property taxes for lenders who have made loans secured by real estate. Lenders typically want to know if taxes aren’t being paid because tax liens imposed by governments take priority over their mortgages.
With the information, lenders can protect their interests through several means, including foreclosure.
The acquisition of TRTS quadruples the number of contracts that First American had to 8 million from 1.4 million. Only Transamerica Tax Service with about 13 million contracts is larger, Kennedy said.
The deal also boosts the revenue at First American’s tax unit. For the first 10 months this year, the unit grossed $3.5 million while TRTS took in about $10 million, Kennedy said.
All 500 TRTS employees, except for its president and executive vice president, will be retained for the near future and added to the current work force of 100, he said. The two top TRTS executives resigned and were replaced by First American Real Estate’s Wayne Booth as president and John Long as executive vice president. They held the same positions at First American’s tax service company.
“We aren’t sure yet who, if any, or how many will be let go,” Kennedy said. While business is concentrated where most loans have been made in recent years--the West Coast and the Southeast--the employees are spread throughout the country.
Westwood Equities also owned Ticor Title Insurance Co., which it sold as part of the bankruptcy to the parent firm of Chicago Title Insurance Co., the nation’s largest title insurance company.
First American owns the nation’s second-largest title firm, First American Title Insurance Co., which is headquartered only blocks from where it was created 102 years ago in Santa Ana.
The title company operates a network of more than 5,500 offices or agents in all 50 states and also provides title insurance services in the Bahamas, Bermuda, Canada, Guam, Mexico, Puerto Rico, the Virgin Islands and the United Kingdom.