New asset class servicing capability and core technology platform assessment Altisource

Abstract

The following report provides an analysis of the strategic expansion opportunities for Altisource based on its current market positioning, capabilities, the competitive landscape and the evolving market trends and needs. Altisource has primarily been engaged in providing servicing and technology solutions to the traditional mortgage servicers, with Ocwen Financial Services being its primary client. The REAL Serivicing legacy platform has been its technology workhorse, with everything build around or integrated into this platform. The traditional mortgage industry though significant in terms of its revenue potential presents a stabilizing trend in the US mortgage markets. On the other hand new products that tap into the home-owners equity are fast gaining ground reflecting the changing needs of consumers in the US mortgage markets. These products while still in their nascent phase present a huge potential for growth both in terms of volumes and revenues. We focus entirely on two home-equity based products - the Home Equity Line of Credit (HELOC) and the Home Equity Conversion Mortgage (HECM).While both these products present opportunities for Ocwen to diversify its business portfolio, for Altisource it also presents a challenge of revamping its existing legacy platform. The REAL platform, while is perfectly suited to the traditional mortgage space that Ocwen has operated in, is a monolith that is not amenable to easy reconfiguration and adaptability. The competitive landscape is another important element that dictates how we will need to address the business space that we will chose to enter and also how we will build capabilities and systems to enable us to operate in these new areas. The HELOC markets have been witnessing heavy consolidation in the originators over the last few years. The HECM market on the other hand is still subject to heavy federal regulation and participation has been mostly fragmented. In bringing all these elements together we will need to utilize the strengths and capabilities that we have been able to build up in the traditional mortgage space up until now. Our primary area of exce Hence lies in the handling and recovery of delinquent and defaulted loans. This is a distinctive capability that sets us apart from our competitors - allowing us to operate in a niche segment while at the same time making, inroads into the mainstream markets as well. The report will also briefly discuss unsecured credit cards and its potential, which is another area of diversification being considered by Ocwen as part of the future strategy for Nationwide Credit me. (NCI) which was acquired by Ocwen.