Altisource earnings tumble as foreclosure protections remain in place

While the foreclosure moratorium has helped distressed borrowers, it has eaten away at the bottom line for mortgage servicers.

Altisource Portfolio Solutions experienced that hit, losing $22 million in 2021’s opening quarter, equating to a $1.40 diluted loss per share. The first quarter deficit compared with net losses of $7.2 million in the fourth quarter of 2020 and $11.7 million year-over-year. Falling into the red isn’t new for Altisource in recent years, having lost $67.2 million in 2020, $308 million in 2019 and $5.4 million in 2018. The company turned a profit of $308.9 million in 2017. Altisource’s last profitable quarter came in 3Q 2019 with $7.2 million.

The company generated $48.1 million in 1Q servicing revenue, down quarterly from $57.7 million and annually from $113.2 million. With foreclosures on pause and the moratorium likely to get extended to late 2021, Altisource turned its focus toward the single-family investor market and cost-cutting, chairman and CEO William Shepro said.

“We anticipate that demand for our default related business will begin to return in late 2021 and will stabilize in 2023,” Shepro said in the earnings release. “Following the stabilization, we believe our default business revenue could grow to between $243 million and $397 million based upon the 1.2% pre-pandemic delinquency rate and the 4.4% delinquency rate as of the end of 2020.”

In addition to the default constraints, Altisource pointed to the transition from being an investor in Ocwen’s mortgage servicing rights to reaching an agreement with the company, which gives Altisource the right to field services, title and valuation referrals through 2030.