The board of directors of real estate information, analytics and services provider CoreLogic says they are exploring a sale of the company in the face of the "challenging economic environment and current market conditions."
Although CoreLogic reported $31.5 million in net income during the second quarter, revenue was down 3.5 percent from a year ago, to $411 million.
Revenue from CoreLogic’s business and information services division dropped even more sharply, falling 12.4 percent from a year ago, to $200 million.
The business and information services division "experienced significant declines in appraisal and broker price opinion business reflecting client losses, changing market dynamics and general declines in industry origination and problem loan volumes," the company said in announcing second-quarter results.
Most of CoreLogic’s revenue depends on residential real estate and mortgage transactions, and ongoing servicing related to those transactions, the company said in its most recent quarterly report to investors.
Mortgage originations fell 21 percent during the second quarter of 2011 compared to the same period last year, the company said, citing statistics published by the Mortgage Bankers Association.
In May, the Federal Deposit Insurance Corp. (FDIC), acting as the receiver of Washington Mutual Bank, filed a complaint against CoreLogic Valuation Services LLC, eAppraiseIT LLC, and several of its current and former affiliates.
The lawsuit alleges that eAppraiseIT was grossly negligent and breached its contract with WaMu in the provision of appraisal services in 2006 and 2007 relating to 194 residential mortgage loans and seeks to recover losses of at least $129 million that WaMu allegedly suffered.
CoreLogic said it intends to "defend against these claims vigorously" and that all defendants in the case filed a motion on Aug. 1 to dismiss the lawsuit.
In a midday note to clients, Sterne Agee analyst Greg Smith said any buyer of CoreLogic "would have to be comfortable taking on this potential liability."
CoreLogic rival Lender Processing Services has been hit with a similar FDIC suit seeking $154 million in damages. If CoreLogic was acquired, that would be a positive development for LPS, Smith said, "since it would likely imply that a buyer was not overly concerned with this liability potentially growing larger."
Investors who have a bearish outlook on LPS view the FDIC lawsuit "as a key area of concern should other appraisal customers file similar suits or should the scope of the FDIC lawsuit expand," Smith advised.
CoreLogic is known to many in the residential real estate industry not only for its analytics, but as a provider of services to multiple listing services (MLSs) and brokerages.
CoreLogic’s MarketLinx division has said it provides software and services to MLSs serving about half of all real estate professionals in the U.S. and Canada. MarketLinx products include TEMPO and MLXchange.
CoreLogic’s Partner InfoNet program licenses active and historical listing data from MLSs to help lenders, investors and government agencies evaluate market trends, competing with a similar offering from Realtors Property Resource LLC, a subsidiary of the National Association of Realtors.
CoreLogic also provides marketing, lead evaluation, customer relationship managment, transaction management and custom data to real estate brokers.
Spun off from title insurer First American Corp. in June 2010, CoreLogic has since "taken significant steps to strategically reposition the company and streamline its operating structure," the company said in announcing a possible sale.
As of June 30, 2011, the company was burdened with more than $900 million in long-term debt, including $400 million in senior notes issued on May 20 that carry 7.25 percent interest rate.
CoreLogic sold its employer and litigation services businesses in December 2010. In July, CoreLogic announced it was divesting itself of its operations in India, and that its 4,000 workers there would become employees of business process outsourcing firm Cognizant.
