What changed in this filing

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Item 1. Business

2021-03-11 compared with 2020-03-05 · 179 added, 73 removed, 117 unchanged (68% of the section changed)

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We have prepared our consolidated financial statements in accordance with accounting principles generally accepted in the United States of America (“GAAP”).

Effective January 1, 2019, the Company reorganized its internal reporting structure in connection with Project Catalyst, a project initiated in August 2018 to optimize our operations and reduce costs to better align our cost structure with our anticipated revenues and improve our operating margins.

The internal reorganization included, among other changes, the replacement of segment presidents with a chief operating officer, who is responsible for products, services and operations for the Company’s Mortgage Market and Real Estate Market businesses, reporting to our Chairman and Chief Executive Officer (our chief operating decision maker) who manages our businesses, regularly reviews operating results and profitability, allocates resources and evaluates performance on a consolidated basis.

Prior to January 1, 2019, the Company reported our operations through two reportable segments:

Mortgage Market and Real Estate Market .

In addition, we reported Other Businesses, Corporate and Eliminations separately.

The prior years’ presentation has been reclassified to conform to the current year presentation.

The Company operates with one reportable segment (total Company).

Our principal revenue generating activities are as follows:

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Field Services

Property preservation and inspection services, including vendor management, marketplace transaction management, payment management technologies and a vendor management oversight software-as-a-service (“SaaS”) platform

• Property preservation and inspection services and vendor management oversight software-as-a-service (“SaaS”) platform

• Hubzu ® online real estate auction platform, real estate auction, real estate brokerage and asset management

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Mortgage and Real Estate Solutions

Mortgage origination loan fulfillment, certification and certification insurance services and technologies

Title insurance (as an agent), settlement and valuation services

• Mortgage loan fulfillment, certification and certification insurance services and technologies

• Title insurance (as an agent) and settlement services

• Real estate valuation services

• Residential and commercial construction inspection and risk mitigation services

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• Foreclosure trustee services

• Business services

Other Businesses

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• Pointillist ® customer journey analytics platform

Financial Services business, including post-charge-off consumer debt and mortgage charge-off collection services and customer relationship management services (sold on July 1, 2019)

Buy-Renovate-Lease-Sell (“BRS”) business (wind down completed in 2019)

Residential loan servicing technologies, document management platform and information technology (“IT”) infrastructure management services (wind down completed in 2019 following Ocwen’s transition to another servicing platform)

• Commercial loan servicing technology

• Financial Services business, including post-charge-off consumer debt, mortgage charge-off collection services and customer relationship management services (sold on July 1, 2019)

• Buy-Renovate-Lease-Sell (“BRS”) business (wound down in 2019)

• Residential loan servicing technologies, document management platform and information technology infrastructure management services (wound down in 2019 following Ocwen Financial Corporation’s (together with its subsidiaries, “Ocwen”) transition to another servicing platform)

• Owners.com ® technology-enabled real estate brokerage and provider of related mortgage brokerage and title services (discontinued in the fourth quarter of 2019)

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In evaluating our performance, we focus on service revenue.

Service revenue consists of amounts attributable to our fee-based services and sales of short-term investments in real estate.

Service revenue consists of amounts attributable to our fee-based services and sales of short-term investments in real estate (wound down in 2019).

Reimbursable expenses and non-controlling interests are pass-through items for which we earn no margin.

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Lenders One is a mortgage cooperative managed, but not owned, by Altisource.

Lenders One is included in revenue and reduced from net income to arrive at net income attributable to Altisource.

The Lenders One members’ earnings are included in revenue and reduced from net income to arrive at net income attributable to Altisource.

2020 Highlights

Streamlining Altisource

Sold the Financial Services business, consisting of our Asset Recovery Management, Customer Relationship Management and Mortgage Charge-Off Collections businesses, for $44.0 million , consisting of an up-front payment of $40.0 million less adjustments and an additional $4.0 million scheduled to be paid on the one year anniversary of the closing

Sold the remaining BRS inventory for net proceeds of $41.2 million

Closed the Owners.com business, reducing the cash burn associated with this business

Sold 690,745 Front Yard Residential Corporation (“RESI”) shares for net proceeds of $8.0 million

Repaid $45.0 million of the senior secured term loan from the sale of the Financial Services business and RESI shares

Executed Project Catalyst resulting in approximately $80 million, or 23% lower compensation and benefits, technology and telecommunications, professional services and occupancy related costs compared to 2018

Ended 2019 with $125.4 million of cash, cash equivalents and investment in equity securities

Ended 2019 with $168.5 million of net debt less investment in equity securities, 31% lower than December 31, 2018

Repurchased 982,162 shares of Altisource common stock at an average price of $20.33 per share

Corporate and Financial

• Ended 2020 with $58.3 million of cash and cash equivalents

• Ended 2020 with $188.9 million of net debt

• Sold the Company’s remaining 3.5 million Front Yard Residential Corporation (“RESI”) shares for net proceeds of $46.6 million and used the net proceeds to repay a portion of our Senior Secured Term Loan

Business Highlights

Field Services

Grew Field Services revenue from customers other than Ocwen Financial Corporation (together with its subsidiaries, “Ocwen”), New Residential Investment Corp.

(individually, together with one or more of its subsidiaries or one or more of its subsidiaries individually, “NRZ”) and RESI by 55% in 2019 compared to 2018

Grew Hubzu revenue from customers other than Ocwen, NRZ and RESI by 9% in 2019 compared to 2018

Grew Hubzu inventory from customers other than Ocwen, NRZ and RESI by 50% since December 31, 2018, with such inventory representing 35% of total Hubzu inventory as of December 31, 2019

Mortgage and Real Estate Solutions

Grew Mortgage and Real Estate Solutions revenue from customers other than Ocwen, NRZ and RESI by 6% in 2019 compared to 2018

Pipeline and Customers

Ended the year with a deep sales pipeline and over 500 active customers including all five of the top five servicers, five of the top ten originators, and over 210 Lenders One members

Our customers include some of the largest financial institutions in the United States, government-sponsored enterprises (“GSEs”), commercial banks, servicers, investors, originators and correspondent lenders and mortgage bankers.

• The Company’s 2020 financial performance was negatively impacted by:

◦ Temporary servicer and government COVID-19 related measures to provide financial support to borrowers (i.e., foreclosure and eviction moratoriums and borrower forbearance plans), partially offset by growth in our origination business

◦ One of Ocwen’s MSR investors directed it to transition field services, title and valuation referrals to that investor’s captive vendors;

we believe the transition of these referrals is largely complete

• Service revenue from customers other than Ocwen, New Residential Investment Corp.

(“NRZ”) and RESI grew by 9% in 2020 compared to 2019;

this reflects 47% growth from our origination business, excluding our construction risk mitigation business that was impacted by the pandemic, partially offset by the negative impact of COVID-19 on our default business

• The Company’s customer base continues to develop and grow increasing the potential backlog of default related business which we anticipate will begin to be available to us in 2022 when we forecast that the default market returns to a more normal operating environment

• The Company has a robust unweighted sales pipeline of approximately $220 million

• To address lower revenue in the default business, the Company aggressively reduced cash costs and simplified the organization;

cash costs (other than outside fees and services, severance and fourth quarter 2020 bonus accrual reversals) were $12 million lower in the fourth quarter 2020 compared to the fourth quarter 2019

Our customers include large financial institutions, government-sponsored enterprises (“GSEs”), banks, asset managers, servicers, investors, originators and correspondent lenders and mortgage bankers.

Customer Concentration

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Certain of the Ocwen Services Agreements contain a “most favored nation” provision and also grant the parties the right to renegotiate pricing, among other things.

In February 2019, Altisource and Ocwen entered into agreements that, among other things, facilitate Ocwen’s transition from REALServicing ® and related technologies to another mortgage servicing software platform, establish a process for Ocwen to review and approve the assignment of one or more of our agreements to potential buyers of Altisource’s business lines, requiring Ocwen to use Altisource as service provider for certain service referrals totaling an amount equal to 100% of the applicable service referrals on certain portfolios plus an amount equal to not less than 90% of applicable service referrals from certain other portfolios (determined on a service by service basis), subject to certain additional restrictions and limitations, and affirm Altisource’s role as a strategic service provider to Ocwen through August 2025.

In connection with these agreements, Altisource expressly preserved and did not waive any of its existing contractual rights relating to service referrals, other than with respect to Ocwen transitioning from the REALServicing and related technologies.

If Altisource fails certain performance standards for specified periods of time, then Ocwen may terminate Altisource as a provider for the applicable service(s), subject to certain limitations and Altisource’s right to cure.

Ocwen’s transition to another mortgage servicing platform was completed during 2019.

We are not experiencing a significant impact of the servicing technology transition on the other services we provide to Ocwen, other than what we believe is a temporary impact on default related referral volume and REO inventory conversion rates from Ocwen’s transition to another servicing system.

We believe the REO conversion rates will return to historical levels during the first half of 2020.

For the years ended December 31, 2019 , 2018 and 2017 , service revenue from REALServicing and related technologies was $14.1 million , $35.1 million and $37.2 million , respectively.

Revenue from Ocwen primarily consists of revenue earned from the loan portfolios serviced and subserviced by Ocwen when Ocwen engages us as the service provider, and revenue earned directly from Ocwen, pursuant to the Ocwen Services Agreements.

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We earn additional revenue related to the portfolios serviced and subserviced by Ocwen when a party other than Ocwen or the MSR owner selects Altisource as the service provider.

For the years ended December 31, 2019 , 2018 and 2017 , we recognized revenue of $37.5 million , $47.1 million and $148.5 million , respectively, related to the portfolios serviced by Ocwen when a party

other than Ocwen or the MSR owner selected Altisource as the service provider.

For the years ended December 31, 2020, 2019 and 2018, we recognized revenue of $23.8 million, $37.5 million and $47.1 million, respectively, related to the portfolios serviced by Ocwen when a party other than Ocwen or the MSR owner selected Altisource as the service provider.

These amounts are not included in deriving revenue from Ocwen and revenue from Ocwen as a percentage of revenue discussed above.

In February 2019, Altisource and Ocwen entered into agreements that, among other things, facilitated Ocwen’s transition from REALServicing ® and related technologies to another mortgage servicing software platform, establish a process for Ocwen to review and approve the assignment of one or more of our agreements to potential buyers of Altisource’s business lines, requiring Ocwen to use Altisource as service provider for certain service referrals totaling an amount equal to 100% of the applicable service referrals on certain portfolios plus an amount equal to not less than 90% of applicable service referrals from certain other portfolios (determined on a service by service basis), subject to certain additional restrictions and limitations, and affirm Altisource’s role as a strategic service provider to Ocwen through August 2025.

Ocwen’s transition to another mortgage servicing platform was completed during 2019.

During the second quarter of 2020, Ocwen informed us that an MSR investor instructed Ocwen to use a field services provider other than Altisource on properties associated with certain MSRs.

Based upon the impacted portfolios to date and the designated service provider, Altisource believes that Ocwen received these directions from NRZ.

We believe Ocwen commenced using another field services provider for these properties in July 2020 and continued to transition services during the third quarter of 2020.

We believe that the transition to the replacement field service provider was largely completed as of September 30, 2020.

We estimate that $70.1 million, $150.2 million and $171.0 million of service revenue from Ocwen for the years ended December 31, 2020, 2019 and 2018, respectively, was derived from Field Services referrals from the NRZ portfolios.

Ocwen also communicated to Altisource in the fourth quarter of 2020 that the same investor instructed Ocwen to

use a provider for default valuations and certain default title services other than Altisource on properties associated with such certain MSRs and commenced moving these referrals to other service providers in the fourth quarter of 2020.

We anticipate that the transition of such default valuations and title services will continue during the course of 2021.

We estimate that $18.2 million, $33.2 million and $40.1 million of service revenue from Ocwen for the years ended December 31, 2020, 2019 and 2018, respectively, was derived from default valuations and title services referrals from the NRZ portfolios.

Altisource believes that any action taken by Ocwen to redirect these service referrals breaches Altisource's agreement with Ocwen.

We are currently in discussions with Ocwen to address this matter, and have reserved all of our rights with respect to this matter.

To address the reduction in revenue, Altisource is undertaking several measures to further reduce its cost structure and strengthen its operations.

As of December 31, 2020, accounts receivable from Ocwen totaled $5.9 million, $5.1 million of which was billed and $0.8 million of which was unbilled.

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Ocwen has disclosed that NRZ is its largest client.

As of December 31, 2019, NRZ owned MSRs or rights to MSRs relating to approximately 56% of loans serviced and subserviced by Ocwen (measured in unpaid principal balance (“UPB”)).

In July 2017 and January 2018, Ocwen and NRZ entered into a series of agreements pursuant to which the parties agreed, among other things, to undertake certain actions to facilitate the transfer from Ocwen to NRZ of Ocwen’s legal title to certain of its MSRs (the “Subject MSRs”) and under which Ocwen will subservice mortgage loans underlying the Subject MSRs for an initial term of five years.

As of December 31, 2020, NRZ MSRs or rights to MSRs relating to approximately 36% of loans serviced and subserviced by Ocwen (measured in unpaid principal balance (“UPB”)).

On August 28, 2017, Altisource, through its licensed subsidiaries, entered into a Cooperative Brokerage Agreement, as amended, and related letter agreement (collectively, the “Brokerage Agreement”) with NRZ which extends through August 2025.

Under this agreement and related amendments, Altisource remains the exclusive provider of brokerage services for REO associated with the Subject MSRs, irrespective of the subservicer, subject to certain limitations.

NRZ’s brokerage subsidiary receives a cooperative brokerage commission on the sale of certain REO properties from these portfolios subject to certain exceptions.

The Brokerage Agreement can, at Altisource’s discretion, be terminated by Altisource, if a services agreement is not signed by Altisource and NRZ.

A services agreement has not been signed.

The parties continue to operate under the Brokerage Agreement.

The Brokerage Agreement may otherwise only be terminated upon the occurrence of certain specified events.

NRZ’s brokerage subsidiary receives a cooperative brokerage commission on the sale of REO properties from these portfolios subject to certain exceptions.

The Brokerage Agreement may be terminated by NRZ upon the occurrence of certain specified events.

Termination events include, but are not limited to, a breach of the terms of the Brokerage Agreement (including, without limitation, the failure to meet performance standards and non-compliance with law in a material respect), the failure to maintain licenses which failure materially prevents performance of the contract, regulatory allegations of non-compliance resulting in an adversarial proceeding against NRZ, voluntary or involuntary bankruptcy, appointment of a receiver, disclosure in a Form 10-K or Form 10-Q that there is significant uncertainty about Altisource’s ability to continue as a going concern, failure to maintain a specified level of cash and an unapproved change of control.

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For the years ended December 31, 2020, 2019 and 2018, we recognized additional revenue of $35.1 million, $60.0 million and $83.6 million, respectively, relating to the Subject MSRs when a party other than NRZ selects Altisource as the service provider.

Our services are provided to customers located in the United States.

Our services are provided to customers predominantly located in the United States.

Sales and Marketing

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We believe there are meaningful growth opportunities to sell our suite of services to new customers.

Sell new offerings to existing customers and prospects.

Some of our newer offerings include our suite of support services for Federal Housing Administration (“FHA”) mortgages, Vendorly™, a SaaS-based vendor management platform, and residential and commercial loan disbursement processing, risk mitigation and construction inspection services.

Given the highly regulated nature of the industries that we serve and the comprehensive purchasing process that our institutional customers and prospects follow, the time and effort we spend in expanding relationships or winning new relationships is significant.

For example, it can often take more than one year from the request for proposal or qualified lead stage to the selection of Altisource

as a service provider.

For example, it can often take more than one year from the request for proposal or qualified lead stage to the selection of Altisource as a service provider.

Furthermore, following the selection of Altisource, it is not unusual for it to take an additional six to twelve months or more to negotiate the services agreement(s), complete the implementation procedures and begin receiving referrals.

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These intellectual property rights are important factors in the success of our businesses.

As of December 31, 2019, we have been awarded one patent that expires in 2023, two patents that expire in 2024, eight patents that expire in 2025, three patents that expire in 2026, two patents that expire in 2027, two patents that expire in 2029, one patent that expires in 2030, one patent that expires in 2033, three patents that expire in 2034 and one patent that expires in 2036.

As of December 31, 2020, we have been awarded two patents that expire in 2023, one patent that expires in 2024, eight patents that expire in 2025, three patents that expire in 2026, two patents that expire in 2029, one patent that expires in 2030 and one patent that expires in 2036.

In addition, we have registered trademarks in a number of jurisdictions including the United States, the European Union (“EU”), India and nine other jurisdictions.

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We sell our suite of services to mortgage servicers, mortgage originators, GSEs, buyers and sellers of homes for investment use and financial services firms.

The mortgage and real estate markets are very large and are influenced by macroeconomic factors such as credit availability, interest rates, home prices, inflation, unemployment rates and consumer confidence.

The markets to provide services for mortgage servicers and mortgage originators are highly competitive and generally consist of national companies, in-house providers and a large number of regional and local providers.

We typically compete based upon product and service awareness and offerings, product and service delivery, quality and control environment, technology integration and support, price and financial strength.

We typically compete based upon product and service awareness and offerings, product performance and service delivery, quality and control environment, technology integration and support, price and financial strength.

The markets to provide services for buyers and sellers of homes for investment are highly competitive and generally consist of several national companies, a large number of regional and local providers and start-up companies.

We typically compete based upon product and service awareness and offerings, product and service delivery, ease of transacting, price and personal service.

We typically compete based upon product and service awareness and offerings, product performance and service delivery, ease of transacting, price and personal service.

Our competitors may have greater financial resources, brand recognition, alternative or disruptive products and technology and other competitive advantages.

We cannot determine our market share with certainty, but believe for mortgage servicers we have a modest share of the market, and for the others we have a relatively small market share.

As of December 31, 2019 , we had the following number of employees:

United States

Consolidated Altisource

Total employees

We have not experienced any work stoppages and we consider our relations with employees to be good.

We believe our future success will depend, in part, on our continuing ability to attract, hire and retain skilled and experienced personnel.

Human Capital:

Every day at Altisource, our global team across four different continents works together to provide industry-leading services and solutions to our clients.

We consider our diverse workforce as a key differentiator for our business.

The following sections describe some of the key elements of one of our greatest assets, our human capital.

We function by a set of core values communicated to our employees by management and available on our website.

The following core values, which are regularly referenced in our employee communications, guide the conduct of Altisource and its employees:

• Act With Integrity - Exhibit unwavering integrity, compliance and ethical conduct at all times

• Energize People - Enable exceptional people to inspire their teams and drive results

• Empower Innovation - Reward the relentless creation of innovative and compliant solutions to achieve our mission and generate value for our customers

• Exceed Customer Expectations - Deliver best-in-class results and customer service

• Win as a Team - Embrace the passion, energy and power of our global teams to win as “One-Altisource”

• Enrich Communities - Create positive impacts for the communities where we live and serve

We adjusted our social and environmental engagement efforts in 2020 in response to the difficulties presented by COVID-19 pandemic.

We undertook many successful community support initiatives including our participation in the “National Wreaths Across America” and the “Toys for Tots” programs to give presents to children across the United States, food donations to soup kitchens in Uruguay and providing “Happiness Kits” to underprivileged children in India.

We also sought to play our part in addressing climate change.

During 2020, we continued with programs to reduce waste, and paper, energy and water consumption.

In 2021 we intend to continue to assess our real estate portfolio, telecommuting and transport programs to further reduce our impact on the environment, including as employees potentially return from remote work arrangements.

Workforce and Diversity

Given the nature of our business, our global workforce consists of various diverse talent groups.

The majority of our employees support our mortgage default-related and originations services.

We also have a significant number of technology employees developing and maintaining our technology enabled solutions.

In the United States, in addition to supporting operations, a number of our employees fill roles that require professional licenses and work in the product, sales and marketing, and corporate functions.

The India workforce primarily comprises the operations teams supporting operations, technology, and corporate functions, while Uruguay supports several of the corporate functions.

The executive management team is mostly based out of Luxembourg, our headquarters.

As of December 31, 2020, we employed 2,726 employees across four continents:

• North America, United States :

697 employees

◦ 50% female / 50% male

• Asia, India :

1,945 employees

◦ 30% female / 70% male

• South America, Uruguay :

◦ 69% female / 31% male

• Europe, Luxembourg :

◦ 40% female / 60% male

In the United States, 50% of the workforce self-identifies as members of an ethnic minority group.

We believe that our globally diverse, inclusive, and collaborative workforce makes us a more innovative and creative company.

We are an equal opportunity employer and prohibit any form of unlawful discrimination or harassment.

At Altisource, everyone is valued and appreciated for their distinct contributions to the growth and sustainability of our business.

Hiring Practices

At Altisource, we believe in hiring the best talent, empowering our people and encouraging them to deliver their best.

Globally our recruiting conversion rate (initial screening to hire) is approximately 5%.

Our hiring process comprises of a mix of assessments and interviews, which help us hire the best candidates who are likely to succeed in our organization.

In 2020, we added 922 talented professionals to our global workforce.

We also place a strong emphasis on internal development and promotion, as well as encouraging mobility within our internal talent.

In 2020, 27% of our open positions were filled internally.

We leverage social and networking platforms to identify and engage with key talent for critical and senior positions.

We use Altisource talent communities where we can engage inquiring candidates to share information about our Company and accept profiles for future opportunities.

For our entry level roles, where we hire in volumes, we often run campaigns on job portals,

engage with universities, use career-service platforms and host virtual or walk-in interviews.

We may adjust our talent acquisition strategies according to the cultural and social norms of the applicable geographies in which we operate.

People Practices

Our people practices aim to develop our workforce and retain high performers.

We maintain various touchpoints along the employee life cycle to support our employees and improve their experiences.

At an overall level in 2020, we successfully retained 72% of our workforce, which included the retention of 85% of employees deemed high performers.

However, our originations business witnessed significantly higher turnover in 2020 compared to the Companywide average, primarily driven by a highly competitive employment market for experienced originations professionals in the United States and India.

Our human resources team partnered with the business to implement measures designed to improve retention rates and develop a steady talent pipeline to meet business requirements for the origination businesses.

We also developed processes in 2020 to adapt to remote working arrangements, including efforts aimed at maintaining employee engagement.

We emphasized virtual engagement activities through the year, created virtual recognition forums for our employees and are currently working on further improving our employee experience in a remote environment.

We emphasize employee development and training.

Each of our employees invested on average 40 hours in training in 2020, generally including a mix of functional, compliance and behavioral learning programs.

We believe that our structured training programs help our employees to acquire and maintain the skills necessary to be effective in their roles.

A key focus area for 2021 is to help our employees to improve their work performance in a remote work environment.

We also conduct regular talent review and succession planning exercises that help us identify and develop key talent and to create plans to mitigate potential succession gaps.

In 2020, we conducted a detailed succession planning exercise covering several critical roles.

Compensation and Benefits

Our compensation practices strive to attract, retain, motivate, and reward employees to drive performance.

We generally position our compensation levels to the mid-point of the market;

however, we may adjust our compensation above the mid-point in response to applicable market conditions or to attract critical resources as may be needed.

In 2020, owing to high demand for residential mortgage originations skills, we implemented significant increases in compensation for origination roles in an effort to maintain market competitiveness.

Incentives are a key component of our compensation structure.

The incentive plans vary for different businesses and help us drive performance.

Our incentive structure primarily comprises of:

• Annual incentives for most of the employees in a managerial role, linked to tangible annual scorecards which are comprised of defined financial goals specific to the Company and/or their respective businesses as well as the employees’ individual performance against pre-established metrics

• Quarterly or annual incentive plan for our sales employees, linked to defined performance and long-term value add metrics

• Monthly or quarterly incentives for our associates in operations, mainly linked to defined production, productivity, quality and compliance metrics

Most of the employees in managerial roles receive a part of their annual incentive in Restricted Stock Units (“RSUs”).

The composition of the incentives is determined by the Compensation Committee of our Board of Directors, with the equity component generally constituting between 25% and 40% of the total value of the incentive, depending on the level of the employee, with the Compensation Committee retaining the discretion to increase the equity component up to 100% of the value of the incentive.

Employees at senior levels generally receive a larger portion of their incentives in equity.

We believe that this methodology helps align the interests of our management level employees with the interests of our shareholders on long term value creation.

Apart from our annual incentive plans, we also employ long-term incentive plans for certain senior executives.

Our long-term incentives are primarily comprised of:

• Service-based awards to encourage retention, linked to achieving minimum performance goals.

These awards generally vest over three to four year periods with vesting in equal annual installments.

• Performance-Based Awards .

These awards generally vest if certain specific financial measures are achieved;

generally one-third vests on each anniversary of the grant date or the awards cliff-vest on the third anniversary of the

The number of performance-based restricted shares and restricted share units that may vest will be based on the level of achievement, as specified in the award agreements.

If the performance criteria achieved is above certain financial performance levels, participants have the opportunity to vest in up to 150% of the restricted share unit award for certain awards.

If the performance criteria achieved is below a certain thresholds, the award is canceled.

• Performance-Based and Market-Based Awards .

These awards generally vest if certain specific financial measures are achieved and if certain specific market conditions are achieved (i.e., Total Shareholder Return (“TSR”) compared against the Russell 3000 stock market index).

If the performance criteria achieved is above certain financial performance levels and Altisource’s share performance is above certain established criteria, participants have the opportunity to vest in up to 300% of the restricted share unit award for certain awards.

If the performance criteria or the market criteria is below certain thresholds, the award is canceled.

We believe that the design of the performance-based award and market-based award, incentivizes the leadership team to focus on the long-term value creation for shareholders and other stakeholders.

Our employee benefit programs are customized for each geography.

We regularly benchmark our plans to remain competitive.

Impact of COVID-19 Pandemic

Employee health and well-being is critical for us and we are committed to supporting our employees through the COVID-19 pandemic.

As part of this support, we ensure our employees in the United States and India have health coverage to help address medical costs related to the treatment of COVID-19.

Our employees in other countries are covered by their local applicable social security or health programs.

We also provide time off to those employees who are diagnosed with the virus.

Driven by health considerations, as well as local regulations, we temporarily converted most of our workforce to remote out-of-office work arrangements beginning in March 2020.

As of December 31, 2020, most of our workforce continued to work remotely, except for a small number of employees who work at our facilities due to client requirements or other requirements related to their job duties.

To provide a safe working environment for our employees who continue to work from our facilities in the United States, we introduced safety measures in line with the United States Centers for Disease Control (CDC) and Prevention guidelines.

For our employees who continue to work from our facilities in India, we defined safety measures in line with the guidelines provided by the regulatory bodies of the central and state governments and the local municipal corporations.

We intend to continue reviewing our safety measures and recommendations from the relevant authorities as we consider the return of employees to our facilities.

We believe the remote workforce model has allowed us to continue operations without interruption or a significant impact to productivity.

We expect the current remote workforce model to continue for most employees until the threat of the COVID-19 pandemic is substantially reduced.

As the COVID-19 pandemic progresses, we will continue to assess its impact on our operations and may adjust our working model to respond to changing circumstances.

We undertook several workforce related initiatives in 2020 in response to declines in our default-related businesses as a result of the COVID-19 pandemic and one of the investors of our largest customer instructing our customer to redirect certain referral from us to the investor’s captive service provider.

These cost reduction measures included workforce reductions across our operations, employee furloughs and temporary compensation reductions for most of our United States and Luxembourg employees, senior management and independent directors.

As of December 31, 2020, our workforce was 17% lower than our workforce as of January 1, 2020.

Our workforce compensation was reinstated between June and October, with the compensation of senior management being reinstated in October.

The cash compensation of our independent directors remains reduced to 80% of the pre-reduction compensation.

We provided notice of further workforce reductions in February 2021 in response to certain measures and announcements from the federal government regarding the extension and expansion of the national foreclosure and eviction moratoriums, and the anticipated continued impact to our default related businesses.

This reduction will impact approximately 8% of our global workforce through the first two quarters of 2021.

Certain of our revenues can be impacted by seasonality.

Specifically, revenues from property sales, loan originations and certain property preservation services in Field Services typically tend to be at their lowest level during the fall and winter months and at their highest level during the spring and summer months.

More specifically, revenues from property sales, loan originations and certain property preservation services in Field Services typically tend to be at their lowest level during the fall and winter months and at their highest level during the spring and summer months.

Government Regulation

Our business and the business of our customers are or may be subject to extensive scrutiny and regulation by federal, state and local governmental authorities including the Federal Trade Commission (“FTC”), the Consumer Financial Protection Bureau (“CFPB”), the Securities and Exchange Commission (“SEC”), the Department of Housing and Urban Development (“HUD”), various federal and state banking, financial and consumer regulators and the state and local agencies that license or oversee certain of our auction, real estate brokerage, mortgage and debt collection services, trustee services, property management services and insurance services.

Our business and the business of our customers are or may be subject to extensive scrutiny and regulation by federal, state and local governmental authorities including the Federal Trade Commission (“FTC”), the Consumer Financial Protection Bureau (“CFPB”), the Securities and Exchange Commission (“SEC”), the Department of Housing and Urban Development (“HUD”), various federal and state banking, financial and consumer regulators and the state and local agencies that license or oversee certain of our auction, real estate brokerage, mortgage and debt collection services, trustee services, mortgage origination underwriter and broker services, property management services and insurance services.

We also must comply with a number of federal, state and local laws, which may include, among others:

• the Americans with Disabilities Act (“ADA”);

the Bank Secrecy Act (“BSA”);

• the Bank Secrecy Act;

• the California Consumer Privacy Act (“CCPA”);

• the California Homeowner Bill of Rights (“CHBR”);

• the California Privacy Rights Act;

• the Controlling the Assault of Non-Solicited Pornography And Marketing Act (“CAN-SPAM”);

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• the Home Ownership and Equity Protection Act (“HOEPA”);

the National Housing Act (“NHA”);

• the National Housing Act;

• the New York Real Property Actions and Proceedings Law (“RPAPL”);

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In addition to federal and state laws regarding privacy and data security, we are also subject to data protection laws in the countries in which we operate.

Additionally, certain of our entities are or may be subject to the European Union General Data Protection Regulation (“GDPR”).

Additionally, certain of our entities are or may be subject to the EU General Data Protection Regulation (“GDPR”).

Legal requirements can and do change as statutes and regulations are enacted, promulgated or amended.

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The Dodd-Frank Act is extensive and includes reform of the regulation and supervision of financial institutions, as well as the regulation of derivatives, capital market activities and consumer financial services.

The Dodd-Frank Act, among other things, created the CFPB, a federal entity responsible

for regulating consumer financial services and products.

The Dodd-Frank Act, among other things, created the CFPB, a federal entity responsible for regulating consumer financial services and products.

Title XIV of the Dodd-Frank Act contains the Mortgage Reform and Anti-Predatory Lending Act (“Mortgage Act”).

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The failure of our customers to properly identify or account for regulatory requirements applicable to such services could expose us to significant penalties, fines, settlements, costs and consent orders that could have an adverse effect on our financial condition or results of operations.

We may be subject to licensing and regulation as a provider of certain services including, among others, services as a mortgage origination underwriter, mortgage broker, valuation provider, appraisal management company, asset manager, property renovator, title insurance agent, insurance broker and underwriter, real estate broker, auctioneer and foreclosure trustee in a number of jurisdictions.

We may be subject to licensing and regulation as a provider of certain services including, among others, services as a mortgage origination underwriter, mortgage broker, valuation provider, appraisal management company, asset manager, property inspection and preservation provider, title insurance agent, insurance broker and underwriter, real estate broker, auctioneer and foreclosure trustee in a number of jurisdictions.

Our employees and subsidiaries may be required to be licensed by or registered with various jurisdictions for the particular type of service sold or provided and to participate in regular continuing education programs.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business