Altisource to shutter buying, renovation, leasing and sales business
Altisource Portfolio Solutions plans to discontinue its buy-renovate-lease-sell business for single-family homes and sell its short-term inventory in order to cut costs and repay debt.
Lower overall service revenue at Altisource during the third quarter was primarily due to the fact that there were fewer homes sold in its buy-lease-renovate-sell unit.
Altisource's nearly $197 million in total service revenue during the period was down 12% from the same quarter a year ago, and 6% on a consecutive quarter basis.
The buy-renovate-lease-sell business generated more than $20 million in service revenue for the nine months ended Sept. 30, when it had almost $52 million in inventory.
The shuttering of the buy-renovate-lease-sell business is in line with the real estate services and servicing technology firm's broader plans to cut costs by $65 million to $90 million on an annualized basis. The company has more than $800 in annual operating costs, almost $350 million of which are addressable, according to an analysis of the company's second-quarter costs.
"The company is working to streamline our operations with a focus on our larger opportunities," William Shepro, CEO of Altisource, said in a press release. "With the recent sale of the real property management business to Front Yard Residential Corp. (RESI) and RESI's sale of most of its REO and nonperforming loans, we believe it is the right time to exit this smaller operation and reduce our debt."
Altisource is a spinoff of Ocwen Financial that was founded by Ocwen's former chairman William Erbey, but later became a standalone company.
As a standalone company, Altisource has worked to expand its customer base to reduce its dependence on Ocwen for revenue.
Ocwen's existing proprietary system of record has been outsourced and operated by Altisource, and Ocwen is moving its servicing portfolio to a different vendor's system.