Altisource Portfolio Solutions S.A.
Q3 2012 Earnings Call Transcript

Published: 27 Oct 2012

[Operator:]

Good day, ladies and gentlemen, and welcome to the Altisource third quarter earnings conference call. At this time, all participants are I a listen-only mode. Later, we will conduct a question-and-answer session and instructions will follow at that time. (Operator Instructions) As a reminder, today's conference is being recorded. I would now like to introduce your host for today's conference call, Michelle Esterman. You may begin, ma'am.

[Michelle Esterman:]

Thank you, operator. We first want to remind you that the earnings release, Form 10-Q and quarter slides are available on our website at www.altisource.com. These provide additional information investors may find useful. Our presentation today contains forward-looking statements made pursuant to the Safe Harbor provisions of the Federal Securities Laws. Statements in this conference call and in our press release issued earlier today, which are other than historical facts, are forward-looking statements. Factors that may cause actual results to differ materially are discussed in our earnings release as well as our public filings. The company disclaims any intent or obligation to publicly update or revise any forward-looking statements regardless of whether new information become available, future developments occur or otherwise. Joining me for today's call are Bill Erbey, our Chairman; and Bill Shepro, our Chief Executive officer. I would now like to turn the call over to Bill Erbey.

[Bill Erbey:]

Thank you, Michelle. Good morning and thank you for joining today's call. I plan on spending a few minutes discussing our third quarter highlights. Michelle will provide an overview of the third quarter of financial performance. And Bill will update you on our progress against our four strategic initiatives. The third quarter was an exciting quarter for Altisource. Ocwen announced the acquisition of Homeward Residential from WL Ross & Company. The acquisition will bring growth for Ocwen and Altisource, increasing the number of loans serviced by Ocwen by over 50%. Additionally, the acquisition will expand Ocwen's origination capacity, providing a sustainable source of future growth for Ocwen and a new customer for our growing origination related services business. We're also very happy with yesterday's announcement. Ocwen and Walter Investment Management Corporation presented the highest bid in the auction of ResCap Loan Servicing portfolio. As part of the acquisition, Ocwen would acquire a total of $203.7 billion of unpaid principal balance as of August 31, 2012, which would include $126.6 million of mortgage servicing rights, including $21.7 billion in Freddie Mac loans, $42 billion in Ginnie Mae loans and $62.9 billion in private label securities. It will also include sub-servicing contracts amount to $31 billion as well as $46 billion in master servicing contracts. We're also pleased with the progress we made in the Residential Asset Management business. On September 20, we filed two Form 10s to begin the process of establishing Altisource Residential and Altisource Asset Management as separate public companies. Altisource Residential, which we refer to as Residential, will be an externally managed REIT in the single family rental market. We believe Residential will achieve above market returns by acquiring non-performing loans at a lower cost than directly acquiring OREO, and two, operating with a lower cost than its competitors. Residential sourcing strategy for obtaining single-family rental assets, centers on acquiring non-performing loan portfolios. We believe residential can acquire non-performing loans at approximately 55% of the value of the underlying real estate collateral. For loans in the portfolio where the borrower is willing and able, residential will modify the loan and subsequently work with the borrower to refinance the modified loan at approximately 95% of the value of the underlying real estate collateral, providing Residential an attractive return on investment. For those loans where the borrower is not willing or able to reform or modify the loan, Residential will work to convert the loans to assets for the single-family rental business. By eliminating some of the costs of directly acquiring an REO and leveraging Ocwen's servicing expertise to timely resolve non-performing loans. We believe residential will obtain single-family rental assets at a lower cost than directly buying REO. Altisource will provide property management, rehabilitation management and leasing brokerage services to residential. Leveraging our lower cost structure, we'll be able to provide these services to residential at a cost we believe is below market. Additionally, through Residential's loan servicing agreement with Ocwen, Altisource will provide a suite of mortgage related services on non-performing loans. Later in the call, Bill will quantify the long-tail revenue stream and margin that this will generate for Altisource. Altisource Asset Management, which we refer to as AAMC, is the management company of Residential. AAMC will be focused on developing an overseeing Residential's acquisition strategy, managing Residential's vendors, and providing corporate governance services to Residential. AAMC will be closely aligned with the interest of Residential's shareholders. AAMC will earn its fees based on the dividends paid to Residential shareholders with increasing participation as Residential's dividends increase. When we distribute 100% of the ownership of these companies to our shareholders, residential will be capitalized with approximately $100 million of equity an AAMC with $5 million of equity. We expect residential will be able to obtain one-to-one leverage, initially providing you with the ability to acquire $200 million of assets. As opportunities arise, we expect residential to raise additional equity and we're targeting the distribution of these two companies to our shareholders around the end of the year. During the third quarter, we also increased our focus on our next-generation loan servicing system and related technologies. We continue to believe that Ocwen has a very robust pipeline of servicing the acquisition opportunities. To support Altisource's and Ocwen's continued growth and reduce the cost of service loans, we're rebuilding the REALServicing platform and related systems on our next-generation technology. This is an extensive effort that touches almost everything that Ocwen and Altisource do. To accelerate this effort, we established a new technology office in Boston, Massachusetts. We're hiring world class product managers, product architects and product engineers. While this will reduce margins in our Technology Services segment for the next several years, in the longer term, the deployment of the next-generation platform will shrink Technology Services' footprint, reducing capital and operating costs and substantially improving Ocwen's and Altisource's servicing effectiveness and efficiency. I'll now turn the call over to Michelle for a financial update and discussion of 2012 margins. Michelle?

[Michelle Esterman:]

Thank you, Bill. This morning, we reported net income attributable to shareholders to $27 million or $1.08 per diluted share for the quarter, representing a 61% increase over the third quarter of 2011 diluted earnings per share. Slides 4 and 5 provide highlights of our results for the quarter compared to prior periods. The net income growth is primarily due to stronger service revenue growth in the higher-margin Mortgage Services segment. This was given by Ocwen's servicing portfolio growth and extended capture rate of Ocwen's default related business. The growth in diluted earnings per share in excess of net income highlights the impact of the share buyback program. Compared to the second quarter of 2012, service revenues increased marginally driven by a modest increase in Mortgage Segments, partially offset by the seasonally expected decline in Financial Services. Mortgage Services' modest improvement was primarily driven by the growth in our Lenders One Membership, origination related services and Asset Management related services. Mortgage Services' related party service revenue was down slightly. This is because the average number of non-GSE loans serviced by Ocwen decreased slightly and Ocwen's June loan boarding was primarily GSE loans that generate potentially lower revenues per loan for us than non-GSE loans. September third quarter's default-related referral were in some cases deferred as Ocwen increased the timeline to initiate foreclosure filings by 10 days and HAMP 2 resulted in a temporary slowdown in modifications and foreclosures, as additional loans in foreclosure were evaluated for the extended HAMP criteria. This revenue was not lost but rather pushed into the fourth quarter. To help you better understand our revenue model, I'd like to draw you attention to the new data that we're providing in our earnings slides this quarter. In addition to the related party service revenue per loan, Slide 11 now provides related party service revenue we earned per delinquent GSE and delinquent non-GSE loans. This slide also provides additional information on the composition of (inaudible) portfolio. We believe this data will assist you in improving your forecasting models. Net income declined 4% from the second quarter of 2012 from seasonally lower performance in our Financial Services segment and higher costs in our Technology Services segment, as we continue to invest in the development of our next-generation technology. Our third quarter 2012 growth profit as a percentage of service revenue remains consistent with the third quarter of 2011 and decreased modestly from the second quarter of 2012. A lower third quarter gross margin relates to higher costs in our Technology Services segment, seasonally lower performance in our Financial Services segment, partially offset by our improved Mortgage Services margin. Operating income as a percentage of service revenue increased by 100 basis points from the third quarter of 2011 and decreased slightly in the third quarter of 2012 compared to the second quarter. The higher operating margins in the first three quarters of 2012 over 2011 illustrate the stabilization of our SG&A costs. From a cash perspective, we generated $43.1 million in operating cash flow for the third quarter of 2012. This represents $0.36 for every $1 of service revenue as compared to $0.22 for the second quarter of 2012. We deployed cash during the third quarter by investing $3.1 million in facilities and technology to support our growth. The higher third quarter operating cash flow per service revenue dollar is primarily the result of quarterly timing differences in converting working capital to cash. At the end of the third quarter, we had $84.4 million of cash. We intend to issue approximately $200 million of debt in the fourth quarter to support Altisource's growth opportunities. One of these opportunities is the residential asset business and related management company. We expect to capitalize these businesses with $105 million and dividend our ownership in these businesses to our shareholders. This investment not only benefits our shareholders through their ownership in these new businesses, but also provides a long-tailed revenue stream for Altisource as a service provider to residential asset business. We also plan to use the debt proceeds to invest in the services businesses associated with Ocwen's acquisition of servicing rights and platforms. As Ocwen's competitors have developed fee-based businesses similar to Altisource, our investment in the services businesses will support Ocwen's ability to competitively address the market while also providing significant revenue opportunities with attractive return to the Altisource. I will now turn the call over to Bill.

[Bill Shepro:]

Thank you, Michelle, and good morning. I plan on spending a few minutes on what we are doing to prepare Altisoure for what we expect will be substantial growth as a result of Ocwen's announced acquisition of the Homeward Residentail and ResCap platforms. Then I plan to spend a few minutes discussing a few new services we are developing and providing you with an update on our four strategic initiatives. We are preparing for the growth for the Ocwen's Homeward Residential and ResCap acquisitions will bring. We conservatively estimate that these transactions will require us to hire approximately 1600 employees and we have started the hiring process. We have both the physical and the technology capacity to add these employees as we have more than 4500 seats available. As a result, we believe we will be able to rapidly onboard and operationalize Ocwen's acquisition of these portfolios. We continue to work with Ocwen to develop new default-related services. For example, we developed an drecently began to roll out our mortgage modification title insurance services. In addition, we are working closely with OCwen to provide assistance related to short sales and deeds-in-lieu of foreclosure. There is a large opportunity to bring more transparency and efficiency to the short sale and deed-in-lieu processes. While continuing to support Ocwen's growth takes precedence, we have established four strategic initiatives to position Altisource for long-term revenue and earnings growth and customer diversification. As a reminder, the four initiatives include developing the Residential Asset business for single-family home rentals, growing our origination related services by leveraging our acquisition nof Lendes One and our investment in Correspondent One, fully developing our consumer real estate portal for distressed and non-distressed home sales and improving the Financial Services segment's earnings and growth its revenue. Turning to our strategy initiative in specifically Slide 6, with respect to eh residential rental business, we continue to extend our internal residential asset management capabilities for the rehabilitation, leasing and management of single-family homes. Altisource will be the exclusive service provider of these services to residential. As residential develops and grows its business, Altisource will establish an attractive longer-term revenue stream. For each home acquired by residential that requires rehabilitation, we estimate that Altisource will generate approximately $1625 in revenue from the renovation and initial marketing and leasing services. Once homes are part of the rental portfolio, we estimate that Altisource will generate approximately $1275 per home in recurring revenue per year. As our revenue will be largely based on the fee we earn and generally will not include the direct cost of material and labor purchased by residential, we expect our margins will range from 40% to 50%. In addition to these revenue streams, we expect Altisource to generate revenue from default related services provided to Ocwen as the servicer of Residential's non-performing loans. As you can see on Slide 7, growing our origination services business in a second strategic initiative. In the third quarter, we grew our service revenue from origination related services by 69% over the third quarter of 2011. We also sequentially grew our origination related services revenue by 23% over the second quarter of 2012. This is reflective of Lenders One membership growth, strong origination volume and an increasing number of the Lenders One members retaining Altisource to provide them with origination related services. As shown on Slide 7, when comparing the end of the third quarter to the end of the second quarter, Lenders One membership increased from 232 to 241 and the number of signed services agreements with the members increased from 108 to 128. During the third quarter, we also began to pilot – we also began a pilot of our initial bundle of origination-related services with several of the Lenders One members. We hope to complete the pilot and roll up the bundle to the full complement of the members beginning next year. Turning to Slide 8, our third growth initiative is to fully develop the consumer real estate portal for distressed and non-distressed home sales. In the third quarter, we re-launched the business under a new brand, Hubzu, with a significantly enhanced user experience. The addition of new features and functionality allows us to further extend the efficiency and transparency we deliver in facilitating the home-buying and selling process. Hubzu is an online real estate transaction website focused on driving a high volume of relevant traffic to each home to accelerate the sales cycle at the optimal sales price. We generate service revenue in three ways. First, we earn a listing broker commission, second, a web transaction fee and, third, for those properties sold through our auction of buyer's premium. In the third quarter of 2012, Hubzu generated $14.8 million of service revenue, a 47% increase from the third quarter of 2011. Today, we sell all of Ocwen's REO through our real estate portal. With the launch of Hubzu, we have initiated two efforts to grow the business. First, we are beginning to have conversations with servicers and financial institutions to add them to our marketplace and further extend our leadership position in REO home sales. We continue to believe our ability to accelerate the sales price processed at the right price will deliver significant value to these customers. Second, we are in the final stages of preparing to open up Hubzu to individual listing agents and brokers. Over the past year, we have received interest from individual listing agents to utilize both our significant marketing reach and simple and transparent offer management system for their clients. We intend to leverage the launch of this year's segment to lay the foundation for a broader entry into the non-distressed home sale market. Lastly, Slide 9 outlines the Financial Services segment's initiative. We continue to build the foundation for higher margins. In 2012, we are simplifying the technology architecture, increasing automation and implementing borrowers' self-help programs. In the third quarter, we eliminated a legacy mainframe system, allowing us to leverage our dialogue engine and introduce borrowers' self-help for all products while reducing costs. We expect our margin improvement initiatives to be complete by the end of the first half of 2013. From a revenue perspective, the Financial Services segment recently invested in a sales team and are developing a pipeline of new business. Looking to 2013, we intend to pursue growth from existing customers and deeper penetration of the industries we currently serve. In 2014, with our next-generation technology in place, we plan to provide higher-margin platform business process outsourcing solutions similar to what is being used by Ocwen. These solutions include a suite of technologies including dialogue engines and customized customer self-help program to improve performance and reduce variability and outcomes. In closing, we have a lot of exciting opportunities in front of us, both with the growth of our core operating businesses and the four strategic initiatives. The management team and Altisource employees remain committed to the delivery of high quality services to our customers. At this time, we would like to open up the call for questions. Operator?

[Operator:]

(Operator Instructions) Your first question comes from the line of Doug Kass – Seabreeze Partners.

[Doug Kass:]

Bill, as you mentioned in this – in your talk, you have this remarkable runway of opportunity. It's almost unprecedented in the amount of new business. Thanks to the success recently on Ocwen's acquisition of the portfolios. Can you discuss the specific execution challenges that you face with regard to handling all this volume of new business? You've already discussed the enormous undertaking of hiring 1600 new employees in order to see that this execution goes smoothly.

[Bill Shepro:]

I think we – having gone through three of these now, the Barclays transaction, the Saxon transaction and the Litton transaction, we've really developed the core competency around on-boarding large portfolios. And we have a very strong management team in our Mortgage Services business that's ready to take the incoming referrals. And our HR team is accustomed to hiring these numbers of employees. So I think while it's not easy, we certainly have the play book in place to do it.

[Doug Kass:]

Besides the undertaking of hiring 1600 people, can you briefly discuss, Bill, how you transition in to this volume of new business? What are the other challenges?

[Bill Shepro:]

Well, we're still working, Doug, with Ocwen to develop the timeline, so when we're going to move – physically move the loans from the legacy servicing system to our systems. So that has not been finalized yet. But that's obviously a challenge, so we've got a project plan in place to do that and we'll work closely with Ron Faris and his team to make sure that that happens smoothly.

[Operator:]

Your next question comes from the line of Ryan Zacharia – JAM.

[Ryan Zacharai:]

I just wanted to understand, is my math right that ResCap will add about 1 million loans to the platform, about 50% of which are GSE, 50% of which are non-agency?

[Bill Erbey:]

Well, there is two sets of numbers to look at that we talked about

[Ryan Zacharai:]

That relates to the master servicing and that's really you just being an intermediary for trust, so as (arm) loans hit the platform.

[Bill Erbey:]

That's right.

[Ryan Zacharai:]

And just a question on, excluding Homeward, excluding ResCap, what percentage of Ocwen's title and closing spending was Altisource receiving? Is it – how's the licensing working up there? I see that – it's kind of stagnated a little bit.

[Bill Shepro:]

Yes, I think, with the respect to – we do a couple of services on title. We provide foreclosure information reports or title searches for foreclosures, as well as for REO. And then we provide the title insurance in the escrow services on REO closings. So we're still adding additional space. I don't have it at my finger tips how many states we're in but something comes to minus 29 I think. We recently, just a few weeks ago, added Texas, which is a good state for us to add. There's some meaningful revenue there. And as we discussed during the prepared remarks, we've added mortgage modification title insurance. Now that's not going to be that meaningful for us at least for today because it's – there are very few investors that appear to require that title insurance. But should that change that could become more meaningful for us.

[Ryan Zacharai:]

So it looks like you're capturing somewhere between $38 million and $40 million in closing and title services spent by Ocwen. What percentage of Ocwen's total spend is that?

[Bill Shepro:]

I don't have it at my fingertips. So I want to say that if – these are really rough numbers. If we're doing 2000 or 2200 REO closings a month, we're probably providing the title insurance in the export services on about 1000 units, so just under half or about half.

[Ryan Zacharai:]

And then on Homeward, 22% of the revenue in 2011 and that business was from "ancillary businesses" which sound a lot like the services that Altisource provides for Ocwen. How is that? How should we think about those loans coming on? Are there things that are going to stay with Ocwen once it consummates the Homeward deal?

[Bill Erbey:]

Homeward had an operation that looked a lot like Altisource embedded within it. So that's why you (have) those revenues there.

[Ryan Zacharai:]

And did that not come along with the purchase?

[Bill Erbey:]

It did.

[Ryan Zacharai:]

So what is Ocwen going to do with that platform?

[Bill Erbey:]

Those loans ultimately will be – those third-party services will be provided by Altisource.

[Ryan Zacharai:]

And then as it relates to Correspondent One, can you just give a little bit of an update in terms of how many people you've signed up and what the volumes are looking like there?

[Bill Erbey:]

We just bought $41 million worth of loan originations in the third quarter and we are up to 36 people, 36 lenders that have signed up.

[Ryan Zacharai:]

And is it still – would you still characterize it in the development testing phase?

[Bill Erbey:]

Yes. With Homeward though, we take up a very – a much more well-developed operation that we currently have.

[Ryan Zacharai:]

So is that – is Homeward – it seems like there are a bunch of things that are complementary or almost duplicative between Altisource and Homeward. How – do you have any – can you provide maybe just a little bit more color on how we can reconcile those things?

[Bill Erbey:]

Well, we're not going through exactly what we're going to do. A, we will attempt to be as sufficient as we can with regard to that. And I think one thing that Homeward provides us, it's the first platform we have acquired and ResCap falls into the same category where you actually have senior managers that we would very much like to retain. We think it will add a greater depth to our management strength by a number of those people. And so obviously we're going to be – what I'd say is that what we're going to do – we're going to be very efficient with regard to it. But we are a meritocracy and the best person will win out in those jobs.

[Ryan Zacharai:]

So is the thinking that Altisource might be buying some of these businesses form Ocwen post-closing?

[Bill Erbey:]

Really can't comment on that at this point in time.

[Operator:]

Your next question comes from the line of Carter Malloy – Stephens.

[Carter Malloy:]

The first – whenw e think about the new wins and the origination opportunity available to Altisource and Lenders One, can you help us frame that and how you guys are looking at it?

[Bill Shepro:]

On the Correspondent lending business, we're either Correspondent One or the Homeward lending operation is buying closed loans, there's an opportunity for us to provide quality control services both pre and post closing. And then as the Homeward platform or Correspondent One does a direct-to-consumer, basically to refinance, for example, Ocwen's borrowers, we have an opportunity to provide a lot of additional services. Now Ocwen's portfolio historically didn't have a large GSE portfolio. So that wasn't a big piece of our planning. But with the Homeward acquisition and the ResCap Acquisition, I think that business will grow.

[Carter Malloy:]

And when we look at the onboarding procedure and the related expenses and then we're going to have headcount coming up, can you helps us frame a timeline around those?

[Bill Shepro:]

Well, we started hiring process now. We already have the facilities leased. We're adding the lease in Boston. I think we have some pre-runs. So that starts next year. So that hiring process will start now and (going forward) as these – as we get closer to the onboarding date. So over the next couple of quarters, that will close – those costs will ramp up.

[Carter Malloy:]

And then looking at both Homeward and ResCap, we can expect maybe two or three quarters of margin compression leading up to those coming onboard?

[Bill Shepro:]

Yes, there will be some margin compression as we incur those costs without revenue.

[Carter Malloy:]

And then if we look at the REALServicing platform, is it equipped right now to handle the additional volume? And if not, what kind of investments you need to make there?

[Bill Shepro:]

Yes, I would say we have a project to continue to improve REALServicing as bill discussed the next-generation REALServicing platform. But it's going to require – there's some additional serviers and SANs and things like that that we're going to have to acquire and we started acquiring in order to handle the increased volume. So there will be some capital costs we're going to incur related to that although we don't have that number available today.

[Carter Malloy:]

And lastly, we think about revenue per loan, how is that services revenue per loan going to be effective by the new portfolios coming onboard?

[Michelle Esterman:]

Right, and that's one of the reasons we added the additional information for you that delinquent revenue program by GSE and non-GSE. So clearly our revenue is impacted on a (inaudible) basis depending on whether it's a GSE or a non-GSE loan.

[Bill Shepro:]

If you recall on GSE loans, we don't provide the REO services.

[Operator:]

Your next question comes from the line of Mike Grondahl – Piper Jaffray.

[Mike Grondahl:]

My questions, the $204 billion that Ocwen picked up, is there any way you can just profile the number of loans that represents? And then, secondly, I think Bill Erbey mentioned something about a $120 billion sub-servicing portfolio. Did that stay at Ally?

[Bill Erbey:]

Well, Mike, the $120 billion is servicing that Ally owns that ResCap sub-services for them. And we believe that actually ally is going to try to see what – try to perhaps monetize that position, so that's – we didn't count those in our numbers when we speak to the Street about that.

[Mike Grondahl:]

So that's potentially another opportunity down the road. Is that the way to think of it?

[Bill Erbey:]

That's right. It's not 100% within our sweet spot because it's very, very current product. Again, it's much more originations-centric than it is servicing-centric.

[Bill Shepro:]

Bill, I think the sub-servicing contract was the $31 billion, right?

[Bill Erbey:]

Well, that $31 billion is not Ally related.

[Bill Shepro:]

Right, all right, yes.

[Mike Grondahl:]

And then did you have an estimated number of loans behind the $204 billion?

[Bill Erbey:]

I don't remember the exact size of UPB as a number of loans divided by like 170,000.

[Mike Grondahl:]

And then from Altisource's perspective, how do we think about Altisource's ability to handle future activity? Are things on hold now for a while, as you absorb Homeward and ResCap? Or if Ocwen wins more new business, are you ready for it?

[Bill Shepro:]

So we're going to continue to roll out our origination services. Some of the technology work to support that business may get postponed, Mike. So we're going to continue to roll out services on origination side. And then from a seating capacity, we have additional seats available today to support further growth, should it come our way.

[Mike Grondahl:]

So we shouldn't look at it like the pace of growth is slowed down or paused or anything because of these two acquisitions. Is that fair?

[Bill Shepro:]

Non, we will keep planning for further growth.

[Mike Grondahl:]

And then I appreciate the disclosure on the delinquent loans and revenue. On Page 10, you have that $68 kind of average revenue per loan. Do you have that number broken out between agency and non-agency?

[Bill Shepro:]

We don't – I don't think we …

[Michelle Esterman:]

Well, if you look at the numbers that we show on Slide 11, we provide not only the loan count of GSE and non-GSE delinquent loan, but we also provide you with the third quarter revenue per loan by category. So that's based on third quarter revenue.

[Operator:]

Your next question comes from the line of David Haas – Moore Capital.

[David Haas:]

Just a quick question, a follow up on the new disclosure which was helpful on the Homeward, can you give a sense for the delinquency content of the, let's say, the non-GSE paper that's coming over ResCap?

[Bill Shepro:]

I think at this point that's all the information we can provide.

[Bill Erbey:]

We haven't – Ocwen hasn't provided that information from the disclosure yet.

[David Haas:]

And then just a follow-up question for Bill, on just the – with origination services playing a greater role at ASPS, what was the general thought behind not trying to take down the origination platform at ResCap? Was it that Homeward was sufficient enough to recapture? Or is it that – I'll just leave it there.

[Bill Erbey:]

I really prefer not to comment on that. I think that platform went to Walter.

[Operator:]

Your next question comes from the line of Don Destino – Harvest Capital.

[Don Destino:]

I'm going to get a little greedy on your revenue per loans and see if I can get a little greedy in terms of the disclosure. I appreciate all the new disclosure today. Michelle, is there any way either quantitatively or directionally in the order of magnitude that you could help us understand, you take a loan, a delinquent loan and take it all the way through the process to foreclosure, not deed-in-lieu, what the various revenue opportunities are for Altisource? And then the extent to which the percentages that end up in one of those buckets will be different legacy Ocwen portfolio, ResCap, Homeward?

[Michelle Esterman:]

That would be nice. We really don't go through and track it. And when you're looking at a large number of loans like that, it's really better to look at on a weighted average revenue per loan basis. So no, we don't really look at it based on where it's at in the lifecycle. Obviously we know what we're making per loan at different stages that we have loans that may come in and go out and then come back in.

[Don Destino:]

I thought of a way of simplifying the question to get what I wanted to get at. Is it safe to assume that the percentage of loans that will end up in one of those various buckets for the new acquisitions are the same as the legacy portfolio or will those outcomes be different on the incremental growth?

[Bill Shepro:]

Don, there may be some minor differences depending from the quality of the borrower, for example. But generally speaking, I think you would expect to see the patterns to be the same.

[Operator:]

I'm now showing any further questions at this time. Id' like to turn the conference back to our host for closing comments.

[Bill Shepro:]

Thank you very much for joining.

[Operator:]

Ladies and gentlemen, this does conclude today's presentation. You may now disconnect and have a wonderful day.