Management's discussion and analysis of financial condition and results of
operations ("MD&A") is a supplement to the accompanying consolidated financial
statements and is intended to provide a reader of our financial statements with
a narrative from the perspective of management on our businesses, current
developments, financial condition, results of operations and liquidity.
Significant sections of the MD&A are as follows:

Overview. This section, beginning below, provides a description of recent
developments we believe are important in understanding our results of operations
and financial condition as well as understanding anticipated future trends. It
also provides a brief description of significant transactions and events that
affect the comparability of financial results and a discussion of the progress
being made on our strategic initiatives.

Results of Operations. This section, beginning on page 31, provides an analysis
of our consolidated results of operations for the two years ended December 31,
2021.

Liquidity and Capital Resources. This section, beginning on page 36, provides an
analysis of our cash flows for the two years ended December 31, 2021. We also
discuss restrictions on cash movements, future commitments and capital
resources.

Critical Accounting Policies, Estimates and Recent Accounting Pronouncements.
This section, beginning on page 39, identifies those accounting principles we
believe are most important to our financial results and that require significant
judgment and estimates on the part of management in application. We provide all
of our significant accounting policies in Note 2 to the accompanying
consolidated financial statements.

Other Matters. This section, beginning on page 41, provides a discussion of customer concentration.



OVERVIEW

Our Business

We are 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.

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



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. 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.

Strategy and Core Businesses



We are focused on becoming the premier provider of mortgage and real estate
marketplaces and related technology enabled solutions to a broad and diversified
customer base of residential loan investors, servicers, and originators. The
real estate and mortgage marketplaces represent very large markets, and we
believe our scale and suite of offerings provide us with competitive advantages
that could support our growth. As we navigate the COVID-19 pandemic and its
impacts on our business, we continue to evaluate our strategy and core
businesses and seek to position our businesses to provide long term value to our
shareholders.

Through our offerings that support residential loan investors and servicers, we
provide a suite of solutions and technologies intended to meet their growing and
evolving needs. We are focused on growing referrals from our existing customer
base and attracting new customers to our offerings. We have a customer base that
includes GSEs, asset managers, and several large bank and non-bank servicers
including Ocwen and NRZ. We believe we are one of only a few providers with a
broad suite of servicer solutions, nationwide coverage and scalability. Further,
we believe we are well positioned to gain market share from existing and new
customers in the event delinquency rates remain elevated following the
expiration of the foreclosure moratoriums and forbearance plans, or customers
and prospects consolidate to larger, full-service providers or outsource
services that have historically been performed in-house.

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We also provide services to mortgage loan originators (or other similar mortgage
market participants). We provide a suite of solutions and technologies to meet
the evolving and growing needs of lenders, mortgage purchasers and securitizers.
We are focused on growing business from our existing customer base, attracting
new customers to our offerings and developing new offerings. We have a customer
base that includes the Lenders One cooperative members, which includes
independent mortgage bankers, credit unions, and banks, as well as bank and
non-bank loan originators. We believe our suite of services, technologies and
unique access to the members of the Lenders One mortgage cooperative position us
to grow our relationships with our existing customer base by growing membership
of Lenders One, increasing member adoption of existing solutions and developing
and cross-selling new offerings. Further, we believe we are well positioned to
gain market share from existing and new customers as customers and prospects
consolidate to larger, full-service providers or outsource services that have
historically been performed in-house.

Our earlier stage business consists of Pointillist, a majority owned subsidiary
of Altisource. We developed the Pointillist business through our consumer
analytics capabilities. We believe the Pointillist business is a potentially
disruptive SaaS-based platform which provides unique customer journey analytics
at scale and enables customers to engage through our intelligent platform.
During 2019, we created Pointillist as a separate legal entity to position it
for accelerated growth and outside investment and contributed the Pointillist
business and $8.5 million to it. On May 27, 2021, Pointillist issued $1.3
million in principal of convertible notes to related parties with a maturity
date of January 1, 2023. The notes bore interest at a rate of 7% per annum. The
principal and unpaid accrued interest then outstanding under the notes (1) would
automatically convert to Pointillist equity at the earlier of the time
Pointillist receives proceeds of $5.0 million or more from the sale of its
equity or January 1, 2023, or (2) are repaid in cash or converted into
Pointillist common stock equity based on a $13.1 million Pointillist valuation
(at the Lenders' option) in the event of a corporate transaction or initial
public offering of Pointillist. On October 6, 2021, the shareholders of
Pointillist, entered into a definitive Stock Purchase Agreement to sell all of
the equity interests in Pointillist to Genesys for $150.0 million. The Purchase
Price consisted of (1) an up-front payment of $144.5 million, subject to certain
adjustments, (2) $0.5 million deposited into the Working Capital Escrow, with
excess amounts remaining after satisfying such deficits (if any) being paid to
the sellers, and (3) $5.0 million deposited into an escrow account to satisfy
certain Genesys indemnification claims that may arise on or prior to the first
anniversary of the sale closing and, at Genesys' election, any working capital
deficits that exceed the Working Capital Escrow, with the balance to be paid to
the sellers thereafter. The transaction closed on December 1, 2021 and the notes
were converted to Pointillist equity in connection with the transaction. On a
fully diluted basis, we owned approximately 69% of the equity of Pointillist.
After working capital and other applicable adjustments, we received
approximately $106.0 million from the sale of its Pointillist equity and the
collection of outstanding receivables, with $102.2 million received at closing,
approximately $0.3 million deposited into the Working Capital Escrow and
approximately $3.5 million deposited into the Indemnification Escrow. We
recognized a pre-tax and after-tax gain of $88.9 million from the sale.

COVID-19 Pandemic Impacts



In response to the COVID-19 pandemic, various governmental entities and
servicers implemented unprecedented foreclosure and eviction moratoriums,
forbearance programs and loss mitigation measures to help mitigate the impact to
borrowers and renters. As a result of these measures and other related actions,
industry-wide foreclosure initiations were 89% and 67% lower for the years ended
December 31, 2021 and 2020, compared to the same period in 2019, respectively
(with such foreclosure initiations representing 3%, 38% and 96% of seriously
delinquent loans as of the beginning of the year in 2021, 2020 and 2019,
respectively). The decline in foreclosure initiations resulted in significantly
lower REO referrals to Altisource and negatively impacted virtually all of
Altisource's default related services performed on delinquent loans, loans in
foreclosure and REO.

At the same time, beginning in the first half of 2020 the Federal Reserve
lowered the target for the federal funds rate to 0% to 0.25% and bought billions
of dollars of mortgage backed securities on the secondary market to reduce
interest rates. As a result of the lower interest rate environment, mortgage
originations were 77% and 82% higher for the years ended December 31, 2021 and
2020 compared to 2019, respectively (according to the Mortgage Bankers
Association) driving higher demand for origination related services.

We cannot predict the duration of the pandemic and future governmental measures.
The Federal government's foreclosure and eviction moratoriums expired at the end
of July 2021. The CFPB's rules on temporary loss mitigation measures essentially
prohibited foreclosure initiations until January 1, 2022 other than a few
exceptions, including for those loans that were 120 days or more delinquent
prior to the pandemic. Based on these events, we believe the demand for our
Default business will grow in 2022 after the expiration of the CFPB's temporary
loss mitigation rules, and stabilize during 2023 when we anticipate foreclosures
commenced after the expiration of the foreclosure moratoriums, forbearance plans
and temporary loss mitigation rules become REO and are sold. We further
anticipate that despite the forecasted decline in origination volumes in 2022
compared to 2021, our origination business will continue to grow from new
customer wins, and cross selling existing and new offerings to customers.

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During 2021, to address lower revenue, Altisource worked to (1) reduce our cost
structure, (2) maintain the infrastructure to deliver default related services
for our customer base and support the anticipated increase in demand following
the expiration of the moratoriums and forbearance plans, (3) accelerate the
growth of our originations businesses, and (4) generate cash.

Share Repurchase Program



On May 15, 2018, our shareholders approved the renewal and replacement of the
share repurchase program previously approved by the shareholders on May 17,
2017. Under the program, we are authorized to purchase up to 4.3 million shares
of our common stock, based on a limit of 25% of the outstanding shares of common
stock on the date of approval, at a minimum price of $1.00 per share and a
maximum price of $500.00 per share, for a period of five years from the date of
approval. As of December 31, 2021, approximately 2.4 million shares of common
stock remain available for repurchase under the program. There were no purchases
of shares of common stock during the years ended December 31, 2021 and 2020.
Luxembourg law limits share repurchases to the balance of Altisource Portfolio
Solutions S.A. (unconsolidated parent company) retained earnings, less the value
of shares repurchased. As of December 31, 2021, we can repurchase up to
approximately $80 million of our common stock under Luxembourg law. Our senior
secured term loan agreement also limits the amount we can spend on share
repurchases, which limit was approximately $437 million as of December 31, 2021,
and may prevent repurchases in certain circumstances, including if our leverage
ratio exceeds 3.50 to 1.00.

Ocwen Related Matters

During the year ended December 31, 2021, Ocwen was our largest customer,
accounting for 31% of our total revenue. Additionally, 5% of our revenue for the
year ended December 31, 2021 was earned on the loan portfolios serviced by
Ocwen, when a party other than Ocwen or the MSR owner selected Altisource as the
service provider.

Ocwen has disclosed that it is subject to a number of ongoing federal and state
regulatory examinations, consent orders, inquiries, subpoenas, civil
investigative demands, requests for information and other actions and is subject
to pending and threatened legal proceedings, some of which include claims
against Ocwen for substantial monetary damages. Previous regulatory actions
against Ocwen have subjected Ocwen to independent oversight of its operations
and placed certain restrictions on its ability to acquire servicing rights.
Existing or future similar matters could result in adverse regulatory or other
actions against Ocwen. In addition to the above, Ocwen may become subject to
future adverse regulatory or other actions.

Ocwen has disclosed that NRZ is its largest client. As of December 31, 2021,
approximately 21% of loans serviced and subserviced by Ocwen (measured in UPB)
were related to NRZ MSRs or rights to MSRs. 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 the Subject MSRs and under
which Ocwen will subservice mortgage loans underlying the MSRs for an initial
term of five years. NRZ can terminate its sub-servicing agreement with Ocwen in
exchange for the payment of a termination fee.

The existence or outcome of Ocwen regulatory matters or the termination of the
NRZ sub-servicing agreement with Ocwen may have significant adverse effects on
Ocwen's business and/or our continuing relationship with Ocwen. For example,
Ocwen may be required to alter the way it conducts business, including the
parties it contracts with for services, it may be required to seek changes to
its existing pricing structure with us, it may lose its non-GSE servicing rights
or subservicing arrangements or may lose one or more of its state servicing or
origination licenses. Additional regulatory actions or adverse financial
developments may impose additional restrictions on or require changes in Ocwen's
business that could require it to sell assets or change its business operations.
Any or all of these effects and others could result in our eventual loss of
Ocwen as a customer or a reduction in the number and/or volume of services they
purchase from us or the loss of other customers.

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 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 $0.5 million and $70.1 million of service revenue from
Ocwen for the years ended December 31, 2021 and 2020, 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, with the bulk of such transition occurring during 2021. We
anticipate that the transition of such default valuations and title services
will continue during the course of 2022. We estimate that $2.9 million and $18.2
million of service revenue from Ocwen for the years ended December 31, 2021 and
2020,

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respectively, was derived from default valuations and title services referrals
from the NRZ portfolios. To address the reduction in revenue, Altisource
undertook several measures to further reduce its cost structure, strengthen its
operations and generate cash.

On May 5, 2021 we entered into an Agreement with Ocwen pursuant to which the
terms of certain services agreements between us and Ocwen were extended from
August 2025 through August 2030 and the scope of solutions we provide to Ocwen
was expanded to include, among other things, the opportunity for the Company to
provide first and second chance foreclosure auctions on Government Loans, and
title services on FHA and Veterans Affairs loans, subject to a process to
confirm Altisource's ability to meet reasonable performance requirements, which
process is continuing. The Agreement established a framework for us to expand
the foreclosure trustee solutions we provide to Ocwen in additional states, and,
as mutually agreed upon by the parties, to deliver reverse mortgage related
solutions to Ocwen, subject to negotiation of appropriate statements of work or
other agreements, a process to confirm Altisource's ability to meet reasonable
performance requirements, and technical integrations, as may be applicable. The
Agreement further resolved the contractual dispute between the parties related
to Ocwen's transfer to NRZ the rights to designate service providers other than
Altisource, including mutual releases with respect to such dispute. The
Agreement also addressed Ocwen's rights in the event of certain change of
control or sale of a business transactions by us on or after September 1, 2028.
Since the date of the Agreement, Ocwen has transitioned over 2,300 of its
foreclosure auction inventory on Government Loans to us and increased our
percentage of field services referrals on its Government Loans.

In addition to expected reductions in our revenue from the transition of
referrals for default related services previously identified, if any of the
following events occurred, Altisource's revenue could be further significantly
reduced and our results of operations could be materially adversely affected,
including from the possible impairment or write-off of goodwill, intangible
assets, property and equipment, other assets and accounts receivable:

•Altisource loses Ocwen as a customer or there is an additional significant reduction in the volume of services they purchase from us



•Ocwen loses, sells or transfers a significant portion of its servicing rights
or subservicing arrangements and Altisource fails to be retained as a service
provider

•The contractual relationship between Ocwen and NRZ changes significantly,
including Ocwen's sub-servicing arrangement with NRZ expiring without renewal,
and this change results in a change in our status as a provider of services
related to the Subject MSRs

•Ocwen loses state servicing licenses in states with a significant number of loans in Ocwen's servicing portfolio



•The contractual relationship between Ocwen and Altisource changes significantly
or there are significant changes to our pricing to Ocwen for services from which
we generate material revenue

•Altisource otherwise fails to be retained as a service provider



Management cannot predict whether any of these events will occur or the amount
of any impact they may have on Altisource. However, we are focused on
diversifying and growing our revenue and customer base and we have a sales and
marketing strategy to support these efforts. Moreover, in the event one or more
of these events materially negatively impact Altisource, we believe the variable
nature of our cost structure would allow us to realign our cost structure to
address some of the impact to revenue and that current liquidity would be
sufficient to meet our working capital, capital expenditures, debt service and
other cash needs. There can be no assurance that our plans will be successful or
our operations will be profitable.

Factors Affecting Comparability

The following items impact the comparability of our results:



•The Company's financial performance in its default businesses was negatively
impacted by the COVID-19 pandemic for the year ended December 31, 2021.
Governmental, and in some instances servicer, measures to provide support to
borrowers, including foreclosure and eviction moratoriums, forbearance programs,
and loss mitigation measures, reduced referral volumes and inflows of REO.
COVID-19 pandemic related governmental restrictions and changing vendor and
consumer behavior also impacted financial performance. These impacts were
partially offset by stronger performance from the Company's origination
businesses that benefited from lower interest rates, customer wins and new
offerings for the year ended December 31, 2021 compared to 2020. Across the
Company's three core businesses, service revenue from customers other than
Ocwen, NRZ and Front Yard Residential Corporation ("RESI") for the year ended
December 31, 2021 decreased by 5% compared to 2020. Compared to the year ended
December 31, 2020, the decrease is primarily from a 64% decline in our default
business, partially offset by a 11% growth in our origination businesses.
Service revenue from our default and other business was $107.2 million and
$290.9 million for the years
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ended December 31, 2021 and 2020, respectively, and service revenue from our
origination business was $58.0 million and $52.3 million for the years ended
December 31, 2021 and 2020, respectively.
•On October 6, 2021, the shareholders of Pointillist, a majority owned
subsidiary of Altisource, entered into a definitive Stock Purchase Agreement to
sell all of the equity interests in Pointillist to Genesys for $150.0 million.
The Purchase Price consisted of (1) an up-front payment of $144.5 million,
subject to certain adjustments, (2) $0.5 million deposited into the Working
Capital Escrow, with excess amounts remaining after satisfying such deficits (if
any) being paid to the sellers, and (3) $5.0 million deposited into an escrow
account to satisfy certain Genesys indemnification claims that may arise on or
prior to the first anniversary of the sale closing and, at Genesys' election,
any working capital deficits that exceed the Working Capital Escrow, with the
balance to be paid to the sellers thereafter. The transaction closed on December
1, 2021. On a fully diluted basis, Altisource owned approximately 69% of the
equity of Pointillist. After working capital and other applicable adjustments,
Altisource received approximately $106.0 million from the sale of its
Pointillist equity and the collection of outstanding receivables, with $102.2
million received at closing, approximately $0.3 million deposited into the
Working Capital Escrow and approximately $3.5 million deposited into the
Indemnification Escrow. We recognized a pre-tax and after-tax gain of $88.9
million from the sale. For the year ended December 31, 2021 and 2020, service
revenue from Pointillist was $4.8 million and $2.2 million, respectively.
•Altisource used approximately $20.0 million of the proceeds from the sale of
its equity interest in Pointillist to repay the outstanding balance on its
revolving line of credit. This revolving line of credit remains available to
Altisource according to its terms.
•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 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 $0.5 million and $70.1 million of service revenue from
Ocwen for the years ended December 31, 2021 and 2020, 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, with the bulk of such transition occurring during 2021. We
anticipate that the transition of such default valuations and title services
will continue during the course of 2022. We estimate that $2.9 million and $18.2
million of service revenue from Ocwen for the years ended December 31, 2021 and
2020, respectively, was derived from default valuations and title services
referrals from the NRZ portfolios. To address the reduction in revenue,
Altisource undertook several measures to further reduce its cost structure,
strengthen its operations and generate cash.
•During the year ended December 31, 2020 we recognized an unrealized gain of
$4.0 million from the change in fair value on our investment in RESI in other
income (expense), net in the consolidated statements of operations and
comprehensive income (loss) from a change in the market value of RESI common
shares (no comparative amount for the year ended December 31, 2021). In 2020,
the Company sold all of its remaining 3.5 million shares of RESI for net
proceeds of $46.6 million. As required by our senior secured term loan
agreement, the Company used the net proceeds to repay a portion of its senior
secured term loan.
•In August 2018, Altisource initiated Project Catalyst, a project intended to
optimize its operations and reduce costs to better align its cost structure with
its anticipated revenues and improve its operating margins (finalized in 2020).
During the year ended December 31, 2020, Altisource incurred $12.0 million of
severance costs, professional services fees, facility consolidation costs,
technology costs and business wind down costs related to the reorganization plan
(no comparative amount for the year ended December 31, 2021).
•On July 1, 2019, Altisource sold its Financial Services business, consisting of
its post-charge-off consumer debt and mortgage charge-off collection services
and customer relationship management services (the "Financial Services
Business") to Transworld Systems Inc. ("TSI") for $44.0 million consisting of an
upfront payment of $40.0 million, subject to a working capital adjustment
(finalized during 2019) and transaction costs upon closing of the sale, and an
additional $4.0 million payment on the one year anniversary of the sale closing.
On July 1, 2020, the Company received net proceeds of $3.3 million representing
TSI's final installment payment less certain amounts owed to TSI.
•The Company recognized an income tax provision of $3.2 million for the year
ended December 31, 2021. The income tax provision for the year ended
December 31, 2021 was driven by no income tax provision on the gain on sale of
Pointillist, income tax on transfer pricing income from India, no tax benefit on
the pretax loss from our Luxembourg operating company and Pointillist, uncertain
tax position and tax on unrepatriated earnings in India.
•The Company recognized an income tax provision of $8.6 million for the year
ended December 31, 2020. The income tax provision on losses before income taxes
and non-controlling interests for the year ended December 31, 2020 was primarily
driven by income in our US and other foreign operations from transfer pricing on
services provided to our Luxembourg operating company, no tax benefit on the
pretax losses from our Luxembourg operating company for the
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year ended December 31, 2020 and tax expense on unrepatriated earnings in India, partially offset by lower transfer pricing rates due to the COVID-19 pandemic.


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RESULTS OF OPERATIONS

Following is a discussion of our results of operations for the years ended December 31, 2021 and 2020.

The following table sets forth information on our consolidated results of operations for the years ended December 31:



(in thousands, except per share data)                                           2021            % Increase (decrease)             2020

Service revenue                                                             $ 170,613                      (51)               $ 347,313
Reimbursable expenses                                                           6,555                      (60)                  16,285
Non-controlling interests                                                       1,285                      (34)                   1,949
Total Revenue                                                                 178,453                      (51)                 365,547
Cost of Revenue                                                               171,366                      (44)                 305,194
Gross profit                                                                    7,087                      (88)                  60,353
Operating expense (income):
Selling, general and administrative expenses                                   67,049                      (28)                  92,736
Gain on sale of businesses                                                    (88,930)                              N/M               -
Restructuring charges                                                               -                     (100)                  11,972
Income (loss) from operations                                                  28,968                      165                  (44,355)
Other income (expense), net:
Interest expense                                                              (14,547)                     (18)                 (17,730)
Unrealized gain on investment in equity securities                                  -                     (100)                   4,004
Other income, net                                                                 864                      130                      375
Total other income (expense), net                                             (13,683)                      (2)                 (13,351)

Income (loss) before income taxes and non-controlling interests                15,285                      126                  (57,706)
Income tax provision                                                           (3,232)                     (62)                  (8,609)

Net income (loss)                                                              12,053                      118                  (66,315)
Net income attributable to non-controlling interests                             (241)                     (71)                    (841)

Net income (loss) attributable to Altisource                                $  11,812                      118                $ (67,156)

Margins:
Gross profit/service revenue                                                        4  %                                             17  %
Income (loss) from operations/service revenue                                      17  %                                            (13) %

Earnings (loss) per share:
Basic                                                                       $    0.75                      117                $   (4.31)
Diluted                                                                     $    0.74                      117                $   (4.31)

Weighted average shares outstanding:
Basic                                                                          15,839                        2                   15,598
Diluted                                                                        16,063                        3                   15,598

_____________________________________

N/M - not meaningful.


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Revenue

Revenue by line of business consists of the following for the years ended December 31:



 (in thousands, except per share data)           2021         % Increase (decrease)        2020

 Service revenue:
 Field Services                               $  45,576                 (71)            $ 157,100
 Marketplace                                     35,956                 (56)               82,189
 Mortgage and Real Estate Solutions              83,627                 (20)              103,906
 Earlier Stage Business                           4,821                 115                 2,243
 Other                                              633                 (66)                1,875
 Total service revenue                          170,613                 (51)              347,313

 Reimbursable expenses:
 Field Services                                   1,459                 (66)                4,344
 Marketplace                                      2,481                 (70)                8,331
 Mortgage and Real Estate Solutions               2,615                 (28)                3,610

 Total reimbursable expenses                      6,555                 (60)               16,285

 Non-controlling interests:
 Mortgage and Real Estate Solutions               1,285                 (34)                1,949

 Total revenue                                $ 178,453                 (51)            $ 365,547


N/M - not meaningful.

2021 service revenue of $170.6 million was 51% lower than 2020 primarily from
COVID-19 pandemic related foreclosure and eviction moratoriums and borrower
forbearance plans, and an MSR investor's 2020 instructions to Ocwen to
transition field services, title and valuation referrals historically provided
to Altisource to the MSR investor's captive vendors. The decrease for the year
ended December 31, 2021 was partially offset by an increase in revenue from our
origination business of 11%, from higher origination related volumes driven by a
lower interest rate environment, customer wins and new offerings.

We recognized reimbursable expense revenue of $6.6 million for the year ended
December 31, 2021, a 60% decrease compared to the year ended December 31, 2020.
The decreases in reimbursable expense revenue for the year ended December 31,
2021 was consistent with the decline in service revenue discussed above.

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. However, as a result of the pandemic and related
measures, the seasonal impact to revenue may not follow historical patterns.

Cost of Revenue and Gross Profit



Cost of revenue principally includes payroll and employee benefits associated
with personnel employed in customer service, operations and technology roles,
fees paid to external providers related to the provision of services,
reimbursable expenses, technology and telecommunications costs and depreciation
and amortization of operating assets.

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Cost of revenue consists of the following for the years ended December 31:



(in thousands)                            2021         % Increase (decrease)        2020

Compensation and benefits              $  69,990                 (26)            $  94,365
Outside fees and services                 66,386                 (55)              146,322
Technology and telecommunications         25,273                 (30)       

35,912


Reimbursable expenses                      6,555                 (60)       

16,285


Depreciation and amortization              3,162                 (74)               12,310

Total                                  $ 171,366                 (44)            $ 305,194


We recognized cost of revenue of $171.4 million for the year ended December 31,
2021, a 44% decrease compared to the year ended December 31, 2020. The decrease
in outside fees and services was primarily driven by lower service revenue in
the Field Services, Marketplace and Mortgage and Real Estate Solutions
businesses, discussed in the revenue section above. Compensation and benefits
decreased primarily due to cash cost savings measures taken in 2020 in response
to the COVID-19 related decrease in service revenue and reduction in revenue
from Ocwen discussed in the revenue section above. The Company also continued to
reduce employee costs in the year ended December 31, 2021 as a result of the
extension of the expiration of foreclosure moratoriums and forbearance plans. In
addition, depreciation and amortization was lower from the completion of the
depreciation periods of certain premises and equipment and the reduction in
capital expenditures. The decrease in reimbursable expenses was consistent with
the changes in reimbursable expense revenue discussed in the revenue section
above.

Gross profit decreased to $7.1 million, representing 4% of service revenue, for
the year ended December 31, 2021 compared to $60.4 million, representing 17% of
service revenue, for the year ended December 31, 2020. Gross profit as a
percentage of service revenue in 2021 decreased compared to 2020, primarily due
to revenue mix with lower revenue from the higher margin Marketplace businesses
and lower gross profit margin in the Field Services business. These decreases
were partially offset by our COVID-19 cash cost savings measures.

Selling, General and Administrative Expenses



Selling, general and administrative ("SG&A") expenses includes payroll for
personnel employed in executive, sales and marketing, finance, technology, law,
compliance, human resources, vendor management, facilities and risk management
roles. This category also includes professional services fees, occupancy costs,
marketing costs, depreciation and amortization of non-operating assets and other
expenses.

SG&A expenses consist of the following for the years ended December 31:



(in thousands)                                                  2021            % Increase (decrease)             2020

Compensation and benefits                                   $  28,367                      (20)               $  35,521
Occupancy related costs                                         9,332                      (52)                  19,363
Amortization of intangible assets                               9,467                      (36)                  14,720
Professional services                                          10,163                      (11)                  11,444
Marketing costs                                                 2,157                      (35)                   3,325
Depreciation and amortization                                   1,430                      (45)                   2,580
Other                                                           6,133                        6                    5,783

Selling, general and administrative expenses                $  67,049                      (28)               $  92,736


SG&A for the year ended December 31, 2021 of $67.0 million decreased by 28%
compared to the year ended December 31, 2020. The decrease was primarily driven
by lower compensation and benefits, occupancy related costs and amortization of
intangible assets. Compensation and benefits decreased primarily due to cash
cost savings measures taken in 2020 and 2021 in response to the COVID-19 related
decrease in service revenue and reduction in revenue from Ocwen discussed in the
revenue section above. The decreases in occupancy related costs primarily
resulted from facility consolidation initiatives. The decrease in amortization
of intangible assets was driven by the completion of the amortization period of
certain intangible assets during 2021 and 2020. In addition, the decrease in
marketing costs were primarily driven by COVID-19 cost savings measures and the
decline in revenue.

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Other Operating Expenses (Income)

Other operating expenses (income) include the gain on sale of businesses and restructuring charges.



Other operating expenses (income) consist of the following for the years ended
December 31:

 (in thousands)                                  2021         % Increase (decrease)        2020

 Gain on sale of businesses                   $ (88,930)                         N/M    $      -
 Restructuring charges                                -                (100)              11,972

 Other operating (income) expenses, net       $ (88,930)                         N/M    $ 11,972


N/M - not meaningful.

On December 1, 2021, Altisource sold its equity interest in Pointillist (see
subsection Strategy and Core Businesses in MD&A Overview for more details).
After working capital and other applicable adjustments, Altisource received
approximately $106.0 million from the sale of its Pointillist equity and the
collection of outstanding receivables, with $102.2 million received at closing,
approximately $0.3 million deposited into the Working Capital Escrow and
approximately $3.5 million deposited into the Indemnification Escrow. We
recognized a pre-tax and after-tax gain of $88.9 million from the sale.

In August 2018, Altisource initiated Project Catalyst, a project intended to
optimize its operations and reduce costs to better align its cost structure with
its anticipated revenues and improve its operating margins (finalized in 2020).
During the year ended December 31, 2020 we incurred $12.0 million (no
comparative amount for the year ended December 31, 2021), of severance costs,
professional services fees, facility consolidation costs, technology costs and
business wind down costs related to the reorganization plan.

Income (Loss) from Operations



Income from operations increased to $29.0 million, representing 17% of service
revenue, for the year ended December 31, 2021 compared to a loss from operations
of $(44.4) million, representing (13)% of service revenue, for the year ended
December 31, 2020. Income from operations as a percentage of service revenue
increased for the year ended December 31, 2021 compared to the year ended
December 31, 2020, primarily as a result of the gain on sale of business
recognized during the year ended December 31, 2021, lower SG&A expenses and
restructuring charges, partially offset by lower gross profit margins, as
discussed above.

Other Income (Expense), net

Other income (expense), net principally includes interest expense, unrealized gain (loss) on our investment in RESI common shares and other non-operating gains and losses.



Other income (expense), net was $(13.7) million for the year ended December 31,
2021 compared to $(13.4) million for the year ended December 31, 2020. The
increase in other expense for the year ended December 31, 2021 was primarily
driven by a $4.0 million unrealized gain on our investment in RESI common shares
in 2020 (no comparative amount in 2021). The increase in other expense was
partially offset by lower interest expense during the year ended December 31,
2021. Interest expense decreased primarily due to lower average outstanding
balances of the senior secured term loan as a result of repayments during 2020
and lower interest rates. For the year ended December 31, 2021, the interest
rate of the senior secured term loan was 5.0% compared to 5.3% for the year
ended December 31, 2020.

Income Tax Provision

We recognized an income tax provision of $3.2 million and $8.6 million for the years ended December 31, 2021 and 2020, respectively.



The income tax provision for the year ended December 31, 2021 was driven by no
income tax provision on the gain on sale of Pointillist, income tax on transfer
pricing income from India, no tax benefit on the pretax loss from our Luxembourg
operating company and Pointillist, uncertain tax position and tax on
unrepatriated earnings in India.

The income tax provision on losses before income taxes and non-controlling
interests for the year ended December 31, 2020 was primarily driven by income in
our US and other foreign operations from transfer pricing on services provided
to our Luxembourg operating company, no tax benefit on the pretax losses from
our Luxembourg operating company for the year

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ended December 31, 2020 and tax expense on unrepatriated earnings in India, partially offset by lower transfer pricing rates due to the COVID-19 pandemic.


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LIQUIDITY AND CAPITAL RESOURCES

Liquidity



Our primary source of liquidity has historically been cash flow from operations,
cash proceeds from sales of businesses and cash on hand. However, due to the
COVID-19 pandemic and an MSR investor's instructions to Ocwen to transition
field services, valuation and title services to the investor's captive service
providers, revenue has declined significantly. The lower revenue, partially
offset by cost savings initiatives, resulted in negative operating cash flow
from operations for the year ended December 31, 2021. To increase our liquidity
we entered into a $20 million revolving credit facility during the second
quarter of 2021. In addition, Altisource's December 1, 2021 sale of its equity
interest in Pointillist increased our liquidity. The Pointillist sale generated
approximately $106.0 million in cash, with $102.2 million received at closing,
approximately $0.3 million deposited into the Working Capital Escrow and
approximately $3.5 million deposited into the Indemnification Escrow. Finally,
we believe the anticipated 2022 growth in our origination and default businesses
along with our reduced cost structure should help reduce negative operating cash
flow. We seek to deploy cash generated in a disciplined manner. Principally, we
intend to use cash to develop and grow complementary services and businesses
that we believe will generate attractive margins in line with our core
capabilities and strategy and fund negative operating cash flow. We also use
cash for repayments of our long-term debt and capital investments. In addition,
from time to time we consider and evaluate business acquisitions, dispositions,
closures or other similar actions that are aligned with our strategy.

Credit Agreement



In April 3, 2018, Altisource Portfolio Solutions S.A. and its wholly-owned
subsidiary, Altisource S.à r.l. entered into a credit agreement (the "Credit
Agreement") pursuant to which Altisource borrowed $412.0 million in the form of
Term B Loans and obtained a $15.0 million revolving credit facility. The Term B
Loans mature in April 2024. We terminated the revolving credit facility on
December 1, 2021. As of December 31, 2021, the principal balance of the Term B
Loans was $247.2 million.

There are no mandatory repayments of the Term B Loans due until maturity in
April 2024, except as otherwise described herein and in the Credit Agreement.
All amounts outstanding under the Term B Loans will become due on the earlier of
(i) April 3, 2024, and (ii) the date on which the loans are declared to be due
and owing by the administrative agent at the request (or with the consent) of
the Required Lenders (as defined in the Credit Agreement; other capitalized
terms, unless defined herein, are defined in the Credit Agreement) or as
otherwise provided in the Credit Agreement upon the occurrence of any event of
default.

In addition to the scheduled principal payments, subject to certain exceptions,
the Term B Loans are subject to mandatory prepayment upon issuances of debt,
certain casualty and condemnation events and sales of assets, as well as from a
percentage of Consolidated Excess Cash Flow if our leverage ratio as of each
year-end computation date is greater than 3.00 to 1.00, as calculated in
accordance with the provisions of the Credit Agreement (the percentage increases
if our leverage ratio exceeds 3.50 to 1.00).

The interest rate on the Term B Loans as of December 31, 2021 was 5.00%, representing the sum of (i) the greater of (x) the Adjusted Eurodollar Rate for a three month interest period and (y) 1.00% plus (ii) 4.00%.

Altisource may incur incremental indebtedness under the Credit Agreement from
one or more incremental lenders, which may include existing lenders, in an
aggregate incremental principal amount not to exceed $125.0 million, subject to
certain conditions set forth in the Credit Agreement, including a sublimit of
$80.0 million with respect to incremental revolving credit commitments and,
after giving effect to the incremental borrowing, the Company's leverage ratio
does not exceed 3.00 to 1.00. The lenders have no obligation to provide any
incremental indebtedness.

The Credit Agreement includes covenants that restrict or limit, among other
things, our ability, subject to certain exceptions and baskets, to incur
additional debt, pay dividends and repurchase shares of our common stock. In the
event we require additional liquidity, our ability to obtain it may be limited
by the Credit Agreement.

Credit Facility

On June 22, 2021 Altisource S.à r.l, a subsidiary of Altisource Portfolio
Solutions S.A., entered into a revolving credit facility with a related party,
STS. STS is an investment fund managed by Deer Park Road Management Company, LP.
Deer Park Road Management Company, LP owns approximately 24% of Altisource's
common stock as of December 31, 2021 and its Chief Investment Officer and
managing partner is a member of Altisource's Board of Directors. Under the terms
of the Credit Facility, STS will make loans to Altisource from time to time, in
amounts requested by Altisource and Altisource may voluntarily prepay all or any
portion of the outstanding loans at any time. The Credit Facility provides
Altisource the ability to borrow a maximum amount of $20.0 million through June
22, 2022, $15.0 million through June 22, 2023, and $10.0 million until the end
of the term. Amounts that are repaid may be re-borrowed in accordance with the
limitations set forth below.

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Outstanding amounts borrowed pursuant to the Credit Facility will amortize over
the three-year term as follows: on June 22, 2022, the difference between the
then outstanding balance above $15.0 million and $15.0 million, will be due and
payable by Altisource; on June 22, 2023, the difference between the then
outstanding balance above $10.0 million and $10.0 million, will be due and
payable by Altisource; and on June 22, 2024, the then outstanding balance of the
loan will be due and payable by Altisource.

Borrowings under the Credit Facility bear interest of 9.00% per annum and are
payable quarterly on the last business day of each March, June, September and
December, commencing on September 30, 2021. In connection with the Credit
Facility, Altisource is required to pay customary fees, including an upfront fee
equal to $0.5 million at the initial extension of credit pursuant to the
facility, an unused line fee of 0.5% and, an early termination fee in the event
of a refinancing transaction.

Altisource's obligations under the Credit Facility are secured by a lien on all
equity in Altisource's subsidiary incorporated in India, Altisource Business
Solutions Private Limited, pursuant to a pledge agreement entered into by
Altisource Asia Holdings Ltd I, a wholly owned subsidiary Altisource.

The Credit Facility contains additional representations, warranties, covenants,
terms and conditions customary for transactions of this type, that restrict or
limit, among other things, our ability to use the proceeds of credit only for
general corporate purposes.

The Credit Facility contains certain events of default including (i) failure to
pay principal when due or interest or any other amount owing on any other
obligation under the Credit Facility within three business days of becoming due,
(ii) failure to perform or observe any material provisions of the Credit
Documents to be performed or complied with, (iii) material incorrectness of
representations and warranties when made, (iv) default on any other debt that
equals or exceeds $40.0 million that causes, or gives the holder or holders of
such debt the ability to cause, an acceleration of such debt, (v) entry by a
court of one or more judgments against us in an amount in excess of
$40.0 million that remain unbonded, undischarged or unstayed for a certain
number of days after the entry thereof, (vi) occurrence of a Change of Control,
(vii) bankruptcy and insolvency events. If any event of default occurs and is
not cured within applicable grace periods set forth in the Credit Facility or
waived, all loans and other obligations could become due and immediately payable
and the facility could be terminated.

As of December 31, 2021, there was no outstanding debt under the Credit Facility.

Cash Flows



The following table presents our cash flows for the years ended December 31:

(in thousands)                                                  2021            % Increase (decrease)             2020

Cash flows used in operating activities                     $ (60,405)                    (170)               $ (22,401)
Cash flows provided by investing activities                   102,762                      118                   47,224
Cash flows used in financing activities                        (2,304)                      95                  (49,310)

Net increase (decrease) in cash, cash equivalents and restricted cash

                                                40,053                      264                  (24,487)
Cash, cash equivalents and restricted cash at the
beginning of the period                                        62,096                      (28)                  86,583

Cash, cash equivalents and restricted cash at the end of the period

$ 102,149                       65                $  62,096

Cash Flows from Operating Activities



Cash flows from operating activities generally consist of the cash effects of
transactions and events that enter into the determination of net income. For the
year ended December 31, 2021, cash flows used in operating activities were
$(60.4) million, or approximately $(0.35) for every dollar of service revenue,
compared to cash flows used in operating activities of $(22.4) million, or
approximately $(0.06) for every dollar of service revenue, for the year ended
December 31, 2020. During the year ended December 31, 2021, the increase in cash
used in operating activities was primarily driven by a $10.6 million increase in
net loss excluding the gain on sale of business and a $26.3 million decrease in
non-cash depreciation, amortization of intangibles, stock based compensation and
deferred income tax expenses. The increase in net loss excluding the gain on
sale of business was primarily due to lower gross profit during the year ended
December 31, 2021 from lower service revenue driven by the COVID-19 pandemic and
the loss of certain services relating to one of Ocwen's subservicing customers,
partially offset by decreases in expenses as a result of COVID-19 cash cost
savings measures, the Project Catalyst cost reduction initiatives and lower SG&A
expenses. Operating cash flows can be negatively impacted because of the nature
of some of our services and the mix of services provided. Certain services are
performed immediately following or shortly after the referral,

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but the collection of the receivable does not occur until a specific event occurs (e.g., the foreclosure is complete, the REO asset is sold, etc.). Furthermore, lower margin services generate lower income and cash flows from operations. Consequently, our cash flows from operations may be negatively impacted when comparing one period to another.

Cash Flows from Investing Activities



Cash flows from investing activities generally include additions to premises and
equipment, acquisitions and sales of businesses, and sales of equity securities.
Cash flows provided by investing activities were $102.8 million and $47.2
million for the years ended December 31, 2021 and 2020, respectively. The change
in cash provided by investing activities was primarily driven by $104.1 million
in proceeds from the sale of businesses for the year ended December 31, 2021,
including $101.1 million from the sale of equity in Pointillist and $3.0 million
in connection with the second installment from the August 2018 sale of the
rental property management business to RESI, compared to $3.3 million in
proceeds from the sale of the Financial Services Business for 2020. We used $1.4
million and $2.7 million for the years ended December 31, 2021 and 2020,
respectively, for additions to premises and equipment primarily related to
investments in the development of certain software applications and facility
improvements. In addition, we sold 3.5 million shares of RESI stock for net
proceeds of $46.6 million during the year ended December 31, 2020.

Cash Flows from Financing Activities



Cash flows from financing activities primarily included payments of tax
withholdings on issuance of restricted share units and restricted shares,
distributions to non-controlling interests, debt repayments and for the year
ended December 31, 2021, included proceeds from issuance of debt and debt
issuance costs. Cash flows used in financing activities were $(2.3) million and
$(49.3) million for the years ended December 31, 2021 and 2020, respectively.
During the years ended December 31, 2021 and 2020, we used $(20.0) million and
$(46.6) million, respectively, for repayments of debt from proceeds from the
sale of equity in Pointillist and from proceeds from the sale of RESI common
shares as discussed in the cash flows from investing activities section above.
We distributed $(2.0) million and $(1.1) million, to non-controlling interests
for the years ended December 31, 2021 and 2020, respectively. In addition, we
made payments of $(1.0) million and $(1.6) million for the years ended
December 31, 2021 and 2020, respectively, to satisfy employee tax withholding
obligations on the issuance of restricted shares. These payments were made to
tax authorities, at the employees' direction, to satisfy the employees' tax
obligations rather than issuing a portion of vested restricted shares to
employees. During the year ended December 31, 2021, we received proceeds from
the issuance of debt of $20.0 million and used $(0.5) million in debt issuance
costs in connection with borrowings under the Credit Facility, and received
proceeds from the Pointillist convertible notes payable to related parties of
$1.2 million (no comparable amounts for the year ended December 31, 2020)

Short-term Liquidity Requirements after December 31, 2021



Our significant future short-term liquidity obligations primarily pertain to
interest expense under the Credit Agreement (see Liquidity section above), lease
payments and distributions to Lenders One members. During the next 12 months, we
expect to pay $12.4 million of interest expense (assuming no further principal
repayments and the December 31, 2021 interest rate) under the Credit Agreement
and make lease payments of $3.1 million.

We believe that our existing cash and cash equivalents balances and available
borrowings under the Credit Facility, net of our anticipated cash flows used in
operations, will be sufficient to meet our liquidity needs, including required
interest and lease payments, for the next 12 months.

Long-term Liquidity Requirements after December 31, 2021



Our significant future long-term liquidity obligations primarily pertain to
long-term debt repayments, interest expense under the Credit Agreement (see
Liquidity section above) and operating lease payments on certain of our premises
and equipment. The outstanding balance of our Credit Agreement of $247.2 million
is due on April 1, 2024. During 2023 and 2024, we expect to pay $15.5 million of
interest expense under the Credit Agreement (estimated future interest payments
based on the interest rate as of December 31, 2021 and the April 1, 2024
maturity date). During 2023 and 2024, we expect to make lease payments of $3.7
million. During 2025 and 2026 we expect to make lease payments of $1.7 million.
For further information, see Note 13 and Note 24 to the consolidated financial
statements.

We expect to fund long-term liquidity requirements with a combination of existing cash balances, cash generated by operating activities and proceeds from the refinancing of our Credit Agreement.


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Off-Balance Sheet Arrangements

Our off-balance sheet arrangements consist of escrow arrangements.



We hold customers' assets in escrow accounts at various financial institutions
pending completion of certain real estate activities. These amounts are held in
escrow accounts for limited periods of time and are not included in the
consolidated balance sheets. Amounts held in escrow accounts were $27.5 million
and $20.0 million as of December 31, 2021 and 2020, respectively.


CRITICAL ACCOUNTING POLICIES, ESTIMATES AND RECENT ACCOUNTING PRONOUNCEMENTS



We prepare our consolidated financial statements in accordance with GAAP. In
applying many of these accounting principles, we need to make assumptions,
estimates and judgments that affect the reported amounts of assets, liabilities,
revenue and expenses in our consolidated financial statements. We base our
estimates and judgments on historical experience and other assumptions that we
believe are reasonable under the circumstances. These assumptions, estimates and
judgments, however, are often subjective. Actual results may be negatively
affected based on changing circumstances. If actual amounts are ultimately
different from our estimates, the revisions are included in our results of
operations for the period in which the actual amounts become known.

We have identified the critical accounting policies and estimates addressed
below. We also have other key accounting policies, which involve the use of
assumptions, estimates and judgments that are significant to understanding our
results. For additional information, see Note 2 to the consolidated financial
statements. Although we believe that our assumptions, estimates and judgments
are reasonable, they are based upon information presently available. Actual
results may differ significantly from these estimates under different
assumptions, judgments or conditions.

Revenue Recognition



We recognize revenue when we satisfy a performance obligation by transferring
control of a product or service to a customer in an amount that reflects the
consideration that we expect to receive. This revenue can be recognized at a
point in time or over time. We invoice customers based on our contractual
arrangements with each customer, which may not be consistent with the period
that revenues are recognized. When there is a timing difference between when we
invoice customers and when revenues are recognized, we record either a contract
asset (unbilled accounts receivable) or a contract liability (deferred revenue
or other current liabilities), as appropriate.

Descriptions of our principal revenue generating activities are as follows:

Core Businesses

Field Services



•For property preservation and inspection services and payment management
technologies, we recognize transactional revenue when the service is provided.
•For vendor management transactions and our vendor management oversight SaaS
platform, we recognize revenue over the period during which we perform the
services.
•For reimbursable expenses related to our property preservation and inspection
services, we recognize revenue when the service is provided and recognize an
equal amount in cost of revenue. These amounts are recognized on a gross basis,
principally because generally we have control over selection of vendors and the
vendor relationships are with us, rather than with our customers.

Marketplace



•For the real estate auction platform, real estate auction and real estate
brokerage services, we recognize revenue on a net basis (i.e., the commission we
retain on the sale) as we perform services as an agent without assuming the
risks and rewards of ownership of the asset and the commission earned on the
sale is a fixed percentage or amount.
•For SaaS based technology to manage REO, short sales, foreclosure, bankruptcy
and eviction processes, we recognize revenue over the estimated average number
of months the REO are on the platform. We generally recognize revenue for
professional services over the contract period.
•For reimbursable expenses revenue related to our real estate sales is included
in revenue with an equal amount recognized in cost of revenue. These amounts are
recognized on a gross basis, principally because generally we have control over
selection of vendors and the vendor relationships are with us, rather than with
our customers.

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Mortgage and Real Estate Solutions



•For the majority of the services we provide, we recognize transactional revenue
when the service is provided.
•For title insurance services on real estate closings, we recognize revenue on a
gross basis as we assume the responsibilities of the searches conducted and we
are the primary obligor in the arrangement. Underwriting fees related to the
issuance of the title policy are recognized separately as outside fees and
services.
•For loan disbursement processing services, we recognize revenue over the period
during which we perform the processing services with full recognition upon
completion of the disbursements. For foreclosure trustee services, we recognize
revenue over the period during which we perform the related services, with full
recognition upon completion and/or recording the related foreclosure deed. We
use judgment to determine the period over which we recognize revenue for certain
of these services.
•For reimbursable expenses related to our title and foreclosure trustee services
businesses, we recognize revenue when the service is provided and recognize an
equal amount in cost of revenue. These amounts are recognized on a gross basis,
principally because generally we have control over selection of vendors and the
vendor relationships are with us, rather than with our customers.

Other Businesses

Earlier Stage Business



•For our customer journey analytics platform (sold on December 1, 2021), we
recognized revenue primarily based on subscription fees. We recognized revenue
associated with implementation services and maintenance services ratably over
the contract term.

Other

•For loan servicing technologies, we recognized revenue based on the number of
loans on the system. We generally recognized revenue from professional services
over the contract period.

Goodwill and Identifiable Intangible Assets

Goodwill



We evaluate goodwill for impairment annually during the fourth quarter or more
frequently when an event occurs or circumstances change in a manner that
indicates the carrying value may not be recoverable. We first assess qualitative
factors to determine whether it is more likely than not that the fair value of a
reporting unit is less than its carrying value as a basis for determining
whether we need to perform the quantitative goodwill impairment test. Only if we
determine, based on qualitative assessment, that it is more likely than not that
a reporting unit's fair value is less than its carrying value will we calculate
the fair value of the reporting unit. We estimate the fair value of the
reporting units using discounted cash flows and market comparisons. The
discounted cash flow method is based on the present value of projected cash
flows. Forecasts of future cash flows are based on our estimate of future sales
and operating expenses, based primarily on estimated pricing, sales volumes,
market segment share, cost trends and general economic conditions. The estimated
cash flows are discounted using a rate that represents our estimated weighted
average cost of capital. The market comparisons include an analysis of revenue
and earnings multiples of guideline public companies compared to the Company.

Identifiable Intangible Assets



Identified intangible assets consist primarily of customer related intangible
assets, operating agreements, trademarks and trade names and other intangible
assets. We determine the useful lives of our identifiable intangible assets
after considering the specific facts and circumstances related to each
intangible asset. Factors we consider when determining useful lives include the
contractual term of any arrangements, the history of the asset, our long-term
strategy for use of the asset and other economic factors. We amortize intangible
assets that we deem to have definite lives in proportion to actual and expected
customer revenues or on a straight-line basis over their useful lives, generally
ranging from 4 to 20 years.

We perform tests for impairment if conditions exist that indicate the carrying
value may not be recoverable. When facts and circumstances indicate that the
carrying value of intangible assets determined to have definite lives may not be
recoverable, management assesses the recoverability of the carrying value by
preparing estimates of cash flows of discrete intangible assets generally
consistent with models utilized for internal planning purposes. If the sum of
the undiscounted expected future cash flows is less than the carrying value, we
recognize an impairment to the extent the carrying amount exceeds fair value.

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Income Taxes



We record income taxes in accordance with Financial Accounting Standards Board
Accounting Standards Codification Topic 740, Income Taxes ("ASC Topic 740"). We
account for certain income and expense items differently for financial reporting
purposes and income tax purposes. We recognize deferred income tax assets and
liabilities for these differences between the financial reporting basis and the
tax basis of our assets and liabilities as well as expected benefits of
utilizing net operating loss and credit carryforwards. The most significant
temporary differences relate to accrued compensation, amortization, loss
carryforwards and valuation allowances. We measure deferred income tax assets
and liabilities using enacted tax rates expected to apply to taxable income in
the years in which we anticipate recovery or settlement of those temporary
differences. The effect on deferred tax assets and liabilities of a change in
tax rates is recognized in income in the period when the change is enacted.
Deferred tax assets are reduced by a valuation allowance when it is more likely
than not that some portion or all of the deferred tax assets will not be
realized.

Tax laws are complex and subject to different interpretations by the taxpayer
and respective governmental taxing authorities. Significant judgment is required
in determining tax expense and in evaluating tax positions including evaluating
uncertainties under ASC Topic 740. We recognize tax benefits from uncertain tax
positions only if it is more likely than not that the tax position will be
sustained on examination by the taxing authorities based on the technical merits
of the position. The tax benefits recognized in the financial statements from
such positions are then measured based on the largest benefit that has a greater
than 50% likelihood of being realized upon ultimate settlement. Resolution of
these uncertainties in a manner inconsistent with management's expectations
could have a material impact on our results of operations.

Recently Adopted and Future Adoption of New Accounting Pronouncements

See Note 2 to the consolidated financial statements for a discussion of the recent adoption of a new accounting pronouncements and the future adoption of new accounting pronouncements.



OTHER MATTERS

Customer Concentration

Ocwen

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, 2021 and 2020, we recognized
revenue from Ocwen of $55.6 million and $197.8 million, respectively. Revenue
from Ocwen as a percentage of consolidated revenue was 31% and 54% for the years
ended December 31, 2021 and 2020, 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, 2021 and 2020, we recognized
$9.5 million and $23.8 million, respectively, of such revenue. These amounts are
not included in deriving revenue from Ocwen and revenue from Ocwen as a
percentage of revenue discussed above.

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 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 $0.5 million and $70.1 million of service revenue from
Ocwen for the years ended December 31, 2021 and 2020, 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, with the bulk of such transition occurring during 2021. We
anticipate that the transition of such default valuations and title services
will continue during the course of 2022. We estimate that $2.9 million and $18.2
million of service revenue from Ocwen for the years ended December 31, 2021 and
2020, respectively, was derived from default valuations and title services
referrals from the NRZ portfolios. To address the reduction in revenue,
Altisource undertook several measures to further reduce its cost structure,
strengthen its operations and generate cash.

On May 5, 2021 we entered into an Agreement with Ocwen pursuant to which the
terms of certain services agreements between us and Ocwen were extended from
August 2025 through August 2030 and the scope of solutions we provide to Ocwen
was

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expanded to include, among other things, the opportunity for the Company to
provide first and second chance foreclosure auctions on Government Loans, and
title services on FHA and Veterans Affairs loans, subject to a process to
confirm Altisource's ability to meet reasonable performance requirements, which
process is continuing. The Agreement established a framework for us to expand
the foreclosure trustee solutions we provide to Ocwen in additional states, and,
as mutually agreed upon by the parties, to deliver reverse mortgage related
solutions to Ocwen, subject to negotiation of appropriate statements of work or
other agreements, a process to confirm Altisource's ability to meet reasonable
performance requirements, and technical integrations, as may be applicable. The
Agreement further resolved the contractual dispute between the parties related
to Ocwen's transfer to NRZ the rights to designate service providers other than
Altisource, including mutual releases with respect to such dispute. The
Agreement also addressed Ocwen's rights in the event of certain change of
control or sale of a business transactions by us on or after September 1, 2028.
Since the date of the Agreement, Ocwen has transitioned over 2,300 of its
foreclosure auction inventory on Government Loans to us and increased our
percentage of field services referrals on its Government Loans.

As of December 31, 2021, accounts receivable from Ocwen totaled $3.0 million,
$2.8 million of which was billed and $0.2 million of which was unbilled. 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.

NRZ



Ocwen has disclosed that NRZ is its largest client. As of December 31, 2021,
approximately 21% of loans serviced and subserviced by Ocwen (measured in UPB)
were related to NRZ MSRs or rights to MSRs. 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 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 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, 2021 and 2020, we recognized revenue from NRZ
of $3.1 million and $8.6 million, respectively, under the Brokerage Agreement.
For the years ended December 31, 2021 and 2020, we recognized additional revenue
of $13.6 million and $35.1 million, respectively, relating to the Subject MSRs
when a party other than NRZ selects Altisource as the service provider.

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