Transformation and exit costs lead to large 4Q loss for Altisource

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Altisource Portfolio Solutions lost nearly the same amount of money as it did for the whole year while it continued the business transition started in 2018.

The company lost $306.1 million in the fourth quarter, compared with net income of $7.6 million in the third quarter and a loss of $11.5 million in the fourth quarter of 2018.

For all of 2019, Altisource lost $308 million, far worse than the $5.4 million loss for 2018. In 2017, Altisource had net income of $308.9 million.

Its fourth-quarter loss from operations included restructuring charges of $5 million, a $5.9 million write-off of goodwill and tangible assets associated with the shuttering of Owners.com, and a $2.6 million write off of goodwill from exiting the buy-renovate-lease-sell business plus a $1.8 million loss on the sale of the associated property portfolio.

"During 2019, we continued to reposition Altisource," William Shepro, chairman and CEO, said in a press release. "We sold and closed certain noncore businesses, consolidated our sales and marketing resources under a seasoned leader, established an innovative product organization and further developed our core field services, marketplace, and mortgage and real estate solutions businesses."

In April 2019, Altisource sold Mortgage Builder, a provider of origination and servicing technology, to Constellation Real Estate Group, and its financial services business to Transworld Systems.

The company also was adjusting to the loss of business from Ocwen which — as part of a legal settlement — transitioned its mortgage servicing portfolio from Altisource's platform to Black Knight's during the second quarter.

In the fourth quarter, Altisource was able to grow its revenue by 19% from customers other than Ocwen, New Residential and Front Yard Residential, Shepro said.

On Feb. 18, Front Yard, a real estate investment trust which had ties to Altisource, entered into an agreement to be acquired by Amherst Residential. During the year Altisource sold nearly 691,000 shares of Front Yard common stock for net proceeds of $8 million.

Among Altisource's remaining business lines are real estate owned property auctions, brokerage and field services.

Altisource should start reaping the benefit of its business transformation in the coming year.

"Looking to 2020, our objectives are to accelerate the growth of our core businesses from customers other than Ocwen and New Residential, lower costs, maintain strong liquidity, and reduce debt based upon business and market conditions," Shepro said.

"We are gaining market share and winning business with some of the largest financial institutions in the country and anticipate growing business from other customers by 25% to 35% in 2020 despite historically low delinquency rates. We believe we are in a very strong position to benefit from growing loan originations and a softening economy."

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Earnings Stocks Altisource Portfolio Solutions Ocwen Financial New Residential Investment Corp. MSR Mortgage technology REO Distressed
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