Item 1. Business
ITEM 1. BUSINESS
The Company
Altisource ® is an integrated service provider and marketplace for the real estate and mortgage industries. Combining operational excellence with a suite of innovative services and technologies, Altisource helps solve the demands of the ever-changing markets we serve.
We are publicly traded on the NASDAQ Global Select Market under the symbol “ASPS.” We are organized under the laws of the Grand Duchy of Luxembourg.
We have prepared our consolidated financial statements in accordance with accounting principles generally accepted in the United States of America (“GAAP”).
The Company operates with one reportable segment (total Company). Our principal revenue generating activities are as follows:
Core Businesses
Field Services
• Property preservation and inspection services and vendor management oversight software-as-a-service (“SaaS”) platform
Marketplace
• Hubzu ® online real estate auction platform, real estate auction, real estate brokerage and asset management
• Equator ® , a SaaS-based technology to manage real estate owned (“REO”), short sales, foreclosure, bankruptcy and eviction processes
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Mortgage and Real Estate Solutions
• 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
• Management of the Best Partners Mortgage Cooperative, Inc., doing business as Lenders One ® (“Lenders One”), mortgage banking cooperative
• Foreclosure trustee services
• Business services
Other Businesses
Earlier Stage Business
• Pointillist ® customer journey analytics platform
Other
• 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)
We classify revenue in three categories: service revenue, revenue from reimbursable expenses and non-controlling interests. 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 (wound down in 2019). Reimbursable expenses and non-controlling interests are pass-through items for which we earn no margin. Reimbursable expenses consist of amounts we incur on behalf of our customers in performing our fee-based services that we pass directly on to our customers without a markup. Non-controlling interests represent the earnings of Lenders One. Lenders One is a mortgage cooperative managed, but not owned, by 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
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
• 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
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• 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
Customers
Overview
Our customers include large financial institutions, government-sponsored enterprises (“GSEs”), banks, asset managers, servicers, investors, originators and correspondent lenders and mortgage bankers.
Customer Concentration
Ocwen
Ocwen is a residential mortgage loan servicer of mortgage servicing rights (“MSRs”) it owns, including those MSRs in which others have an economic interest, and a subservicer of MSRs owned by others.
During the year ended December 31, 2020, Ocwen was our largest customer, accounting for 54% of our total revenue. Ocwen purchases certain mortgage services from us under the terms of services agreements and amendments thereto (collectively, the “Ocwen Services Agreements”) with terms extending through August 2025. 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.
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. For the years ended December 31, 2020, 2019 and 2018, we recognized revenue from Ocwen of $197.8 million, $362.7 million and $437.4 million, respectively. Revenue from Ocwen as a percentage of consolidated revenue was 54%, 56% and 52% for the years ended December 31, 2020, 2019 and 2018, respectively.
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, 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. 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.
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
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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. As of December 31, 2019, accounts receivable from Ocwen totaled $19.1 million, $15.7 million of which was billed and $3.4 million of which was unbilled.
NRZ
NRZ is a real estate investment trust that invests in and manages investments primarily related to residential real estate, including MSRs and excess MSRs.
Ocwen has disclosed that NRZ is its largest client. 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”)). 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 MSRs for an initial term of five years, subject to early termination rights.
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 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.
For the years ended December 31, 2020, 2019 and 2018, we recognized revenue from NRZ of $8.6 million, $12.5 million and $28.7 million, respectively, under the Brokerage Agreement. 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.
Other
Our services are provided to customers predominantly located in the United States.
Sales and Marketing
Our enterprise sales and marketing team has extensive relationship management and industry experience. These individuals cultivate and maintain relationships throughout the industry sectors we serve. We sell our suite of services to mortgage servicers, mortgage originators, GSEs, buyers and sellers of homes for investment use and financial services firms.
Our primary sales and marketing focus areas are to:
• Expand relationships with existing customers by cross-selling additional services and growing the volume of existing services we provide. We believe our customer relationships represent meaningful growth opportunities for us; and
• Develop new customer relationships by leveraging our comprehensive suite of services, performance and controls. We believe there are meaningful growth opportunities to sell our suite of services to new customers.
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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. 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.
Intellectual Property and Data
We rely on a combination of contractual restrictions, internal security practices, patents, trademarks and copyrights to establish and protect our trade secrets, intellectual property, software, technology and expertise. We also own or, as necessary and appropriate, have obtained licenses from third parties to intellectual property relating to our services, processes and businesses. These intellectual property rights are important factors in the success of our businesses.
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. These trademarks generally can be renewed indefinitely, provided they are being used in commerce.
We actively protect our rights and intend to continue our policy of taking the measures we deem reasonable and necessary to develop and protect our patents, trademarks, copyrights, trade secrets and other intellectual property rights.
In addition, we may make use of data in connection with certain of our services. This data generally relates to mortgage information, real property information and consumer information. We gather this data from a variety of third party sources, including from governmental entities and, subject to licensed usage rights, we use this data in connection with the delivery of our services, including combining it with proprietary data we generate to further enhance data and metrics in connection with our services.
Market and Competition
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, consumer confidence and, in 2020, the global COVID-19 pandemic.
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 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 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.
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.
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Culture
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 : 74 employees
◦ 69% female / 31% male
• Europe, Luxembourg : 10 employees
◦ 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,
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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
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grant date. 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.
Seasonality
Certain of our revenues can be impacted by seasonality. 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.
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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, 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;
• 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”);
• the Equal Credit Opportunity Act (“ECOA”);
• the Fair and Accurate Credit Transactions Act (“FACTA”);
• the Fair Credit Reporting Act (“FCRA”);
• the Fair Housing Act;
• the Federal Trade Commission Act (“FTC Act”);
• the Gramm-Leach-Bliley Act (“GLBA”);
• the Home Affordable Refinance Program (“HARP”);
• the Home Mortgage Disclosure Act (“HMDA”);
• the Home Ownership and Equity Protection Act (“HOEPA”);
• the National Housing Act;
• the New York Real Property Actions and Proceedings Law (“RPAPL”);
• the Real Estate Settlement Procedures Act (“RESPA”);
• the Secure and Fair Enforcement for Mortgage Licensing (“SAFE”) Act;
• the Servicemembers Civil Relief Act (“SCRA”);
• the Telephone Consumer Protection Act (“TCPA”);
• the Truth in Lending Act (“TILA”); and
• Unfair, Deceptive or Abusive Acts and Practices statutes (“UDAAP”).
We are also subject to the requirements of the Foreign Corrupt Practices Act (“FCPA”) and comparable foreign laws, due to our activities in foreign jurisdictions.
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 EU General Data Protection Regulation (“GDPR”).
Legal requirements can and do change as statutes and regulations are enacted, promulgated or amended. One such enacted regulation is the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank Act”). 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. Title XIV of the Dodd-Frank Act contains the Mortgage Reform and Anti-Predatory Lending Act (“Mortgage Act”). The Mortgage Act imposes a number of additional requirements on lenders and servicers of residential mortgage loans by amending and expanding certain existing regulations. The interpretation or enforcement by regulatory authorities of applicable laws and regulations also may change over time. In addition, the creation of new regulatory authorities or changes in the regulatory authorities overseeing applicable laws and regulations may also result in changing interpretation or enforcement of such laws or regulations.
Our failure or the failure of our customers or vendors to comply with applicable laws or regulations or changing interpretation of such laws or regulations could subject the Company to criminal or civil liability, significant penalties, fines, settlements, costs and consent orders affecting us or our customers that may curtail or restrict the business as it is currently conducted and could have a material adverse effect on our financial condition or results of operations.
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Furthermore, certain of our services are provided at the direction of, and pursuant to, the identified requirements of our customers. 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 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. Periodically, we are subject to audits, examinations and investigations by federal, state and local governmental authorities and receive subpoenas, civil investigative demands or other requests for information from such governmental authorities in connection with their regulatory or investigative authority. Due to the inherent uncertainty of such actions, it is often difficult to predict the potential outcome or estimate any potential financial impact in connection with any such inquiries.
Available Information
We file Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and other information with the SEC. These filings are available to the public on the SEC’s website at www.sec.gov .
Our principal Internet address is www.altisource.com and we encourage investors to use it as a way to easily find information about us. We promptly make the reports we file or furnish with the SEC, corporate governance information (including our Code of Business Conduct and Ethics), select press releases and other related information available on this website. The contents of our website are available for informational purposes only and shall not be deemed incorporated by reference in this report.