Altisource And Its New “Disruptive Enterprise Software”

Posted on by Phil Querin

BullyIn a recent article appearing at the online site “nationalmortgagenews.com” there appeared a short blurb titled “Altisource Opens Technology Office in India.” For those who have never heard of Altisource, they are one of the few major members on the Pantheon of Scoundrels, or POS, for short.  On their website, they proudly boast:

Altisource provides services to some of the most respected organizations in their industries, including one of the nation’s largest sub-prime servicers….

However, in my not-so-humble opinion, there is no such thing as a “respected” subprime servicer, regardless of size.  It’s an oxymoron.  In this case, we know that the servicer Altisource is referring to Ocwen, who spun it off in 2009.  By the hype Altisource gives to providing servicing to Ocwen, it appears to believe that having been whacked for a couple of billion dollars by the feds gives Ocwen a certain amount of “street cred” – perhaps similar to the respect/fear John Dillinger received from his cronies. However, the apple doesn’t fall far from the tree.  Ocwen recently agreed to pay the Consumer Finance Protection Bureau (“CFPB”) $2.2 billion, for all sorts of sordid and illegal loan practices over the years.  And despite being different companies today, they are still financially joined at the hip.  Altisource now has the pleasure of answering questions from Benjamin Lawsky, Superintendent of New York State’s Department of Financial Services, for its too cozy relationship with Ocwen. You see, Ocwen, as servicer of billions of dollars of subprime and nonperforming loans, has used its position as gatekeeper to shakedown folks who are trying to complete short sales in order to extricate themselves from homes awash in negative equity.  This business model suspiciously appears to be based upon one of nature’s most efficient carrion eaters, the vulture. For more on that scam, go to my post here.  It apparently is not enough for Ocwen to reap millions in servicing fees from the owners of these mortgages, i.e. the investors, but – through an arrangement with Altisource – it insists on shaking down other participants in the short sale process, such as the real estate brokers, and directing settlement services such as title insurance, to its in-house affiliate.[1] As a part of its spin-off, Ocwen guaranteed that these settlement services would go to Altisource, rather than to the traditional local providers.  And as mentioned in my post here, it appears that even the rather simple disclosure of affiliated business relationships required under RESPA[2] seems too unimportant for Ocwen to comply with. So what is the point of this rant post?  Now that it is acting as servicer for billions of dollars of nonperforming and subprime loans, it appears that Ocwen is going to further expand its offshore presence. Hence, the title of the nationalmortgagenews, “Altisource Opens Technology Office in India.” Here is how they described their new venture:

The Bangalore office will serve as the headquarters for Altisource Labs, the company’s technology investment arm. The company plans to hire 500 software architects and technology professionals to staff the office.

What is Altisource Labs?  It has a couple of offices in the U.S.  Here’s what its Boston site says they do: What kind of software are we creating?

We’re building enterprise software and analytics solutions that are transforming some of the most influential financial enterprises in the world. Example: Our world-class analytics and consumer psychology solutions help keep millions of struggling Americans in their homes every year by designing effective mortgage loan modifications, simplifying the entire application process and leveraging consumer behavior principles to increase acceptance rates and reduce re-default rates. No one else has anything like it. For us, Big Data is not a buzzword, it’s a Big Deal. It’s what we do. Every day.

Interesting…. So what have they been doing for the past five years as millions of homeowners were queuing up for help?  Why are they developing software systems now?  Memo to Altisource Labs: You’re a tad late to the party.  While there are still many folks in need of help, perhaps you might consider hiring employees with better people skills and with a hands-on approach to loss mitigation.  The idea of developing new software systems for routing beleaguered customers to call centers in India should not be part of your new whiz-bang technology. Why do I say that?  Well, if anyone has ever had the pleasure of trying to communicate their distressed housing issues to one of the Ocwen employees in India, it’s an experience one does not forget.  The folks tending the phones, while perhaps well intentioned, have no latitude to actually say anything that isn’t already on the screen in front of them. Between sitting interminably on hold, and getting transferred multiple times until you hang up in disgust, one has to wonder if Ocwen’s servicing model isn’t actually patterned after a Rube Goldberg machine. Franz Kafka would have been proud! But here is the best quote of the nationalmortgagenews.com article:

“With the addition of Bangalore to the Labs global network, we are committed to building some of the most disruptive enterprise software for the real estate and banking industries from our new facility,” said Ranga Shetty, in an Aug. 21 press release. [Underscore mine.]

Hmmm. “Disruptive enterprise software”? That’s a peculiar way to describe the next big thing.[3]  And what did one of the commenters have to say about this quote? It’s a gem:

Altisource and Ocwen have already disrupted the real estate industry. It’s time they get out of the U.S. market. Posted by steve k | Monday, August 25 2014 at 3:37PM ET

My sentiments exactly! Perhaps Mr. Lawsky can help make that happen. ~PCQ [1] Never mind the fact that most states require the title and escrow services must be located and performed by licensees in the state where the property is located. [2] “An Affiliated Business Arrangement (AfBA) Disclosure is required whenever a settlement service provider involved in a RESPA covered transaction refers the consumer to a provider with whom the referring party has an ownership or other beneficial interest. *** The referring party must give the AfBA disclosure to the consumer at or prior to the time of referral. The disclosure must describe the business arrangement that exists between the two providers and give the borrower an estimate of the second provider’s charges.” (Source)   [3] Actually, it appears to be geek-speak for “…upend[ing] the status quo.”

Posted in Financial Crisis, Foreclosure, Market Conditions, Miscellany, Q-Rants, Real Estate/Distressed, Servicers | Tagged , , , , ,
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