ASPS 10-K Fiscal year ended Dec. 31, 2019

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ITEM 1.	BUSINESS

•	Property preservation and inspection services, including vendor management, marketplace transaction management, payment management technologies and a vendor management oversight software-as-a-service (“SaaS”) platform

•	Hubzu ® online real estate auction platform, real estate auction, real estate brokerage and asset management

•	Equator ® , a SaaS-based technology to manage real estate owned (“REO”), short sales, foreclosure, bankruptcy and eviction processes

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•	Mortgage origination loan fulfillment, certification and certification insurance services and technologies

•	Title insurance (as an agent), settlement and valuation services

•	Residential and commercial construction inspection and risk mitigation services

•	Management of the Best Partners Mortgage Cooperative, Inc., doing business as Lenders One ® (“Lenders One”), mortgage banking cooperative

•	Foreclosure trustee services

•	Pointillist ® customer journey analytics platform

•	Financial Services business, including post-charge-off consumer debt and mortgage charge-off collection services and customer relationship management services (sold on July 1, 2019)

•	Buy-Renovate-Lease-Sell (“BRS”) business (wind down completed in 2019)

•	Residential loan servicing technologies, document management platform and information technology (“IT”) infrastructure management services (wind down completed in 2019 following Ocwen’s transition to another servicing platform)

•	Commercial loan servicing technology

•	Owners.com ® technology-enabled real estate brokerage and provider of related mortgage brokerage and title services (discontinued in the fourth quarter of 2019)

•	Sold the Financial Services business, consisting of our Asset Recovery Management, Customer Relationship Management and Mortgage Charge-Off Collections businesses, for $44.0 million , consisting of an up-front payment of $40.0 million less adjustments and an additional $4.0 million scheduled to be paid on the one year anniversary of the closing

•	Sold the remaining BRS inventory for net proceeds of $41.2 million

•	Closed the Owners.com business, reducing the cash burn associated with this business

•	Sold 690,745 Front Yard Residential Corporation (“RESI”) shares for net proceeds of $8.0 million

•	Repaid $45.0 million of the senior secured term loan from the sale of the Financial Services business and RESI shares

•	Executed Project Catalyst resulting in approximately $80 million, or 23% lower compensation and benefits, technology and telecommunications, professional services and occupancy related costs compared to 2018

•	Ended 2019 with $125.4 million of cash, cash equivalents and investment in equity securities

•	Ended 2019 with $168.5 million of net debt less investment in equity securities, 31% lower than December 31, 2018

•	Repurchased 982,162 shares of Altisource common stock at an average price of $20.33 per share

•	Grew Field Services revenue from customers other than Ocwen Financial Corporation (together with its subsidiaries, “Ocwen”), New Residential Investment Corp. (individually, together with one or more of its subsidiaries or one or more of its subsidiaries individually, “NRZ”) and RESI by 55% in 2019 compared to 2018

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•	Grew Hubzu revenue from customers other than Ocwen, NRZ and RESI by 9% in 2019 compared to 2018

•	Grew Hubzu inventory from customers other than Ocwen, NRZ and RESI by 50% since December 31, 2018, with such inventory representing 35% of total Hubzu inventory as of December 31, 2019

•	Grew Mortgage and Real Estate Solutions revenue from customers other than Ocwen, NRZ and RESI by 6% in 2019 compared to 2018

•	Ended the year with a deep sales pipeline and over 500 active customers including all five of the top five servicers, five of the top ten originators, and over 210 Lenders One members

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•	Expand relationships with existing customers by cross-selling additional services and growing the volume of existing services we provide. We believe our customer relationships represent meaningful growth opportunities for us;

•	Develop new customer relationships by leveraging our comprehensive suite of services, performance and controls. We believe there are meaningful growth opportunities to sell our suite of services to new customers; and

•	Sell new offerings to existing customers and prospects. Some of our newer offerings include our suite of support services for Federal Housing Administration (“FHA”) mortgages, Vendorly™, a SaaS-based vendor management platform, and residential and commercial loan disbursement processing, risk mitigation and construction inspection services.

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•	the Americans with Disabilities Act (“ADA”);

•	the Bank Secrecy Act (“BSA”);

•	the California Consumer Privacy Act (“CCPA”);

•	the California Homeowner Bill of Rights (“CHBR”);

•	the Controlling the Assault of Non-Solicited Pornography And Marketing Act (“CAN-SPAM”);

•	the Equal Credit Opportunity Act (“ECOA”);

•	the Fair and Accurate Credit Transactions Act (“FACTA”);

•	the Fair Credit Reporting Act (“FCRA”);

•	the Fair Housing Act;

•	the Federal Trade Commission Act (“FTC Act”);

•	the Gramm-Leach-Bliley Act (“GLBA”);

•	the Home Affordable Refinance Program (“HARP”);

•	the Home Mortgage Disclosure Act (“HMDA”);

•	the Home Ownership and Equity Protection Act (“HOEPA”);

•	the National Housing Act (“NHA”);

•	the New York Real Property Actions and Proceedings Law (“RPAPL”);

•	the Real Estate Settlement Procedures Act (“RESPA”);

•	the Secure and Fair Enforcement for Mortgage Licensing (“SAFE”) Act;

•	the Servicemembers Civil Relief Act (“SCRA”);

•	the Telephone Consumer Protection Act (“TCPA”);

•	the Truth in Lending Act (“TILA”); and

•	Unfair, Deceptive or Abusive Acts and Practices statutes (“UDAAP”).

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ITEM 1A.	RISK FACTORS

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

•	We could also be impacted if Ocwen loses, sells or transfers a significant portion of its GSE and FHA servicing rights or subservicing arrangements or remaining non-GSE servicing rights or subservicing arrangements and Altisource fails to be retained as a service provider

•	The contractual relationship between Ocwen and NRZ changes significantly 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

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•	limiting our ability to borrow money for our working capital, capital expenditures and debt service requirements or other general corporate purposes;

•	limiting our flexibility in planning for, or reacting to, changes in our operations, our business or the industry in which we compete;

•	requiring us to use a portion of our consolidated excess cash flow, as specified in the senior secured term loan agreements, to repay debt in the event our net debt less marketable securities to earnings before interest, taxes, depreciation and amortization (“EBITDA”) ratio, as specified in the senior secured term loan agreements, exceed certain thresholds; and

•	placing us at a competitive disadvantage by limiting our ability to invest in our business.

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•	execute on our strategic businesses;

•	maintain or improve the quality and legal, regulatory and contractual compliance of services we provide to our customers;

•	meet or exceed the expectations of our customers;

•	maintain a good reputation;

•	successfully leverage our existing customer relationships to sell additional services; and

•	attract new customers.

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ITEM 1B.	UNRESOLVED STAFF COMMENTS

ITEM 2.	PROPERTIES

ITEM 3.	LEGAL PROCEEDINGS

ITEM 4.	MINE SAFETY DISCLOSURES

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ITEM 5.	MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

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(1)	In addition to the repurchases included in the table above, 9,526 common shares were withheld from employees to satisfy tax withholding obligations that arose from the vesting of restricted shares and restricted share units.

(2)	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 in the open market, subject to certain parameters, for a period of five years from the date of approval.

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ITEM 6.	SELECTED FINANCIAL DATA

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(1)	Effective January 1, 2018, mark-to-market adjustments of our investment in equity securities are reflected in our results of operations in connection with the adoption of a new accounting principle (previously reflected in comprehensive income).

(2)	These are non-GAAP measures that are defined and reconciled to the corresponding GAAP measures on pages 27 to 31 .

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ITEM 7.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

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

•	We could also be impacted if Ocwen loses, sells or transfers a significant portion of its GSE and FHA servicing rights or subservicing arrangements or remaining non-GSE servicing rights or subservicing arrangements and Altisource fails to be retained as a service provider

•	The contractual relationship between Ocwen and NRZ changes significantly 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

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On July 1, 2019, Altisource sold its Financial Services business, consisting of 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. In connection with the sale, we recognized a $17.8 million pretax gain on sale for the year ended December 31, 2019 . The parties also entered into a transition services agreement to provide for the management and orderly transition of certain services and technologies to TSI for periods ranging from 2 months to 13 months . For the years ended December 31, 2019, 2018 and 2017, service revenue from the Financial Services Business was $33.4 million, $64.1 million and $61.9 million, respectively. On July 17, 2019, Altisource used $37.0 million of the net up-front payment to repay a portion of its senior secured term loan.

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In October 2019, the Company announced its plans to wind down and close the Owners.com business, which was completed by December 31, 2019. In connection with the wind down of the Owners.com business, the Company recognized a write-off of $5.9 million of goodwill and intangible assets in 2019 as well as wind down and severance costs. For the years ended December 31, 2019, 2018 and 2017, service revenue from Owners.com was $7.1 million, $8.6 million and $4.7 million, respectively.

•	In May 2019, the Company began selling its investment in RESI common stock. During the year ended December 31, 2019 , the Company sold 0.7 million shares for net proceeds of $8.0 million . As required by the senior secured term loan agreement, the Company used the net proceeds to repay a portion of its senior secured term loan.

•	Effective January 1, 2018, the Company adopted a new accounting standard on financial assets and financial liabilities, which requires certain equity investments to be measured at fair value with changes in fair value recognized in net income. Previously, changes in the fair value of the Company’s available for sale securities were included in comprehensive

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In November 2018, the Company announced its plans to sell its short-term investments in real estate and exit the Company’s BRS business and recognized a $(2.6) million write-off of goodwill attributable to the BRS business in 2018. In 2019, the Company sold its remaining short-term investments in real estate (“BRS Inventory”). For the years ended December 31, 2019, 2018 and 2017, service revenue from BRS was $42.5 million, $61.2 million and $32.2 million, respectively. In anticipation of receiving the majority of the proceeds from the sale of the BRS Inventory in 2019, the Company repaid $49.9 million of its senior secured term loan in the fourth quarter of 2018.

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In February 2019, Altisource and Ocwen entered into agreements that, among other things, facilitate Ocwen’s transition from REALServicing and related technologies to another mortgage servicing software platform. The transition was completed during 2019. For the years ended December 31, 2019, 2018 and 2017, service revenue from REALServicing and related technologies was $14.1 million, $35.1 million and $37.2 million, respectively.

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Effective January 1, 2019, the Company implemented a new accounting standard on leases which required the recognition of operating leases by companies as operating lease liabilities on their balance sheets and also required the recognition of right-of-use assets. Adoption of this new standard resulted in the recognition of $42.1 million of right-of-use assets in right-of-use assets under operating leases, $45.5 million of operating lease liabilities ( $16.7 million in other current liabilities and $28.8 million in other non-current liabilities) and reduced accrued rent and lease incentives by $3.4 million in accounts payable and accrued liabilities and other non-current liabilities on the accompanying condensed consolidated balance sheets.

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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. During the years ended December 31, 2019 and 2018 , Altisource incurred $14.1 million and $11.6 million , respectively, of severance costs, professional services fees, facility consolidation costs, technology costs and business wind down costs related to the reorganization plan. Altisource expects to incur additional severance costs, professional services fees, technology costs and facility consolidation costs in connection with this internal reorganization, automation and other technology related activities and will expense those costs as incurred. Based on the Company’s analysis, it currently anticipates the future costs relating to Project Catalyst to be in the range of approximately $10 million to $13 million .

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On June 21, 2018, the United States Supreme Court rendered a 5-4 majority decision in South Dakota v. Wayfair, Inc., holding that a state may require a remote seller with no physical presence in the state to collect and remit sales tax on goods and services provided to purchasers in the state, overturning certain existing court precedent. During the year ended December 31, 2019 , the Company completed the analysis of its services for potential exposure to sales tax in various jurisdictions in the United States. The Company recognized a $0.3 million and $6.2 million loss for the years ended December 31, 2019 and 2018 , respectively, in selling, general and administrative (“SG&A”) expenses in the accompanying consolidated statements of operations and comprehensive income (loss). During the third quarter of 2019, we recognized a net reimbursement from clients of $1.7 million of sales taxes. The Company began invoicing, collecting and remitting sales tax in applicable jurisdictions in 2019. The Company is also in the process of seeking additional reimbursements for sales tax payments from clients; however, there can be no assurance that the Company will be successful in collecting some or all of such additional reimbursements. Future changes in our estimated sales tax exposure could result in a material adjustment to our consolidated financial statements which would impact our financial condition and results of operations.

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In August 2018, the Company sold its rental property management business to RESI for total transaction proceeds of $18.0 million , $15.0 million of which was received on the closing date of August 8, 2018 and $3.0 million of which will be received on the earlier of a RESI change of control or August 8, 2023. The Company recognized a $13.7 million pretax gain on the sale of this business during the year ended December 31, 2018 in the consolidated statements of operations and comprehensive income (loss) in connection with this transaction. For the years ended December 31, 2018 and 2017, service revenue from the rental property management business was $4.2 million and $5.5 million, respectively. In addition, the Company used the proceeds received from the sale of the rental property management business to RESI to repay $15.0 million of the Term B Loans.

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On April 3, 2018, Altisource and its wholly-owned subsidiary, Altisource S.à r.l. entered into the Credit Agreement, pursuant to which, among other things, Altisource borrowed $412.0 million in the form of Term B Loans. Proceeds from the Term B Loans were used to repay the Company’s prior senior secured term loan. In connection with the refinancing, we recognized a loss of $(4.4) million from the write-off of unamortized debt issuance costs and debt discount for the year ended December 31, 2018 . The comparative average interest rates under the Credit Agreement for the Term B Loans

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•	During 2017, we repurchased portions of our senior secured term loan with an aggregate par value of $60.1 million at a weighted average discount of 10.7% , recognizing a net gain of $5.6 million on the early extinguishment of debt in other income.

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The Company recognized an income tax provision of $318.3 million for the year ended December 31, 2019, which included an increase in the valuation allowance in connection with the Luxembourg net operating loss (“NOL”) carryforward of $291.5 million, the impact of a decrease in the Luxembourg statutory income tax rate on deferred taxes of $14.0 million and foreign income tax reserves of $5.6 million. The resulting effective tax rate differs from the Luxembourg statutory income tax rate of 24.9% principally as a result of the increase in valuation allowance, the impact of the decrease in the Luxembourg statutory income tax rate on deferred taxes and foreign income tax reserves discussed above and the jurisdictional mix of income before income taxes and non-controlling interests. Certain of the Company’s India subsidiaries generated taxable income based on cost plus transfer pricing to our Luxembourg subsidiary for their services and certain US and Luxembourg subsidiaries generated taxable losses that did not result in a tax benefit due to a valuation allowance applied to the tax benefit.

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The Company’s effective income tax rate for the year ended December 31, 2018 was 292.9% , which differs from the Luxembourg statutory income tax rate of 26.0% . In 2018, the Company’s effective income tax rate was unusually high because certain of the Company’s India and United States subsidiaries generated taxable income based on cost plus transfer pricing to our Luxembourg subsidiary for their services and the Luxembourg subsidiary incurred a taxable loss. As these jurisdictions have different effective income tax rates (i.e., India has a higher effective income tax rate than Luxembourg), and because of a $1.6 million foreign income tax reserve (and related interest), the Company recognized consolidated income tax expense that was greater than income before income taxes and non-controlling interests.

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The effective income tax rate for the year ended December 31, 2017 was (780.9)% , impacted by three significant items. On December 27, 2017, two of the Company’s wholly-owned subsidiaries, Altisource Solutions S.à r.l. and Altisource Holdings S.à r.l., merged, with Altisource Holdings S.à r.l. as the surviving entity. Altisource Holdings S.à r.l. was subsequently renamed Altisource S.à r.l. The merger is part of a larger subsidiary restructuring plan designed to simplify the Company’s corporate structure, allow it to operate more efficiently and reduce administrative costs. For Luxembourg tax purposes, the merger was recognized at fair value and generated an NOL of $1.3 billion , with a 17 year life, and generated a deferred tax asset of $342.6 million as of December 31, 2017, before a valuation allowance of $41.6 million. This deferred tax asset was partially offset by the impact of other changes in U.S. and Luxembourg income tax rates of $6.3 million and an increase in certain foreign income tax reserves (and related interest) of $10.5 million for the year ended December 31, 2017.

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(1)	These are non-GAAP measures that are defined and reconciled to the corresponding GAAP measures on pages 27 to 31 .

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•	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.

•	Reimbursable expenses revenue related to our property preservation and inspection services 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.

•	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 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.

•	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.

•	For the majority of the services we provide, we recognize transactional revenue when the service is provided.

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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.

•	Reimbursable expenses revenue related to our title and foreclosure trustee services businesses 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.

•	For our customer journey analytics platform, we recognize revenue primarily based on subscription fees. We recognize revenue associated with implementation services and maintenance services ratably over the contract term.

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For our Financial Services business (sold on July 1, 2019), we generally earned fees for our post-charge-off consumer debt collection services as a percentage of the amount we collected on delinquent consumer receivables and recognized revenue following collection from the borrowers. For mortgage charge-off collections performed on behalf of our clients, we recognized revenue as a percentage of amounts collected following collection from the borrowers. We provided customer relationship management services for which we typically earned and recognized revenue on a per-person, per-call or per-minute basis as the related services were performed.

•	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.

•	For short-term investments in real estate (wind down completed in 2019), we recognized revenue associated with our sales of short-term investments in real estate on a gross basis (i.e., the selling price of the property) as we assumed the risks and rewards of ownership of the asset.

•	For our consumer real estate brokerage (discontinued in the fourth quarter of 2019), we recognized revenue on a net basis (i.e., the commission on the sale) as we performed services as an agent without assuming the risks and rewards of ownership of the asset and the commission earned on the sale was a fixed percentage or amount.

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(1)	Represents estimated future interest payments on our Credit Agreement based on the interest rate as of December 31, 2019 .

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ITEM 7A.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

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ITEM 8.	FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

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•	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 software-as-a-service (“SaaS”) platform, we recognize revenue over the period during which we perform the services.

•	Reimbursable expenses revenue related to our property preservation and inspection services 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.

•	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 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 real estate owned (“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.

•	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.

•	For the majority of the services we provide, we recognize transactional revenue when the service is provided.

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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.

•	Reimbursable expenses revenue related to our title and foreclosure trustee services businesses 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.

•	For our customer journey analytics platform, we recognize revenue primarily based on subscription fees. We recognize revenue associated with implementation services and maintenance services ratably over the contract term.

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For our Financial Services business (sold on July 1, 2019, see Note 4), we generally earned fees for our post-charge-off consumer debt collection services as a percentage of the amount we collected on delinquent consumer receivables and recognized revenue following collection from the borrowers. For mortgage charge-off collections performed on behalf of our clients, we recognized revenue as a percentage of amounts collected following collection from the borrowers. We provided customer relationship management services for which we typically earned and recognized revenue on a per-person, per-call or per-minute basis as the related services were performed.

•	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.

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•	For short-term investments in real estate (wind down completed in 2019, see Note 8 ), we recognized revenue associated with our sales of short-term investments in real estate on a gross basis (i.e., the selling price of the property) as we assumed the risks and rewards of ownership of the asset.

•	For our consumer real estate brokerage (discontinued in the fourth quarter of 2019, see Note 8 ), we recognized revenue on a net basis (i.e., the commission on the sale) as we performed services as an agent without assuming the risks and rewards of ownership of the asset and the commission earned on the sale was a fixed percentage or amount.

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(1)	During 2018, goodwill was reduced by $2.3 million in connection with the sale of the rental property management business to RESI (see Note 4 ). During 2019, the Company sold the Financial Services Business (see Note 4 ) which had $2.4 million of goodwill attributed to it.

(2)	During 2018, we recorded a $2.6 million write-off of goodwill attributable to the BRS business, as a result of our decision to discontinue the BRS business in the fourth quarter of 2018 (see Note 8 ). During 2019, we recorded a $5.2 million write-off of goodwill attributable to the Owners.com business, as a result of our decision to wind down and close the business (see Note 8 ).

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(1)	These options contain market-based and performance-based components as described above.

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•	As a result of the net loss attributable to Altisource for the years ended December 31, 2019 and 2018 , 0.3 million and 0.5 million stock options, restricted shares and restricted share units were excluded from the computation of diluted loss per share, as their impacts were anti-dilutive

•	For the years ended December 31, 2019 , 2018 and 2017 , 0.5 million , 0.3 million and 0.5 million , respectively, stock options were anti-dilutive and have been excluded from the computation of diluted (loss) earnings per share because their exercise price was greater than the average market price of our common stock

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For the years ended December 31, 2019 , 2018 and 2017 , 0.8 million , 0.5 million and 0.4 million , respectively, stock options, restricted shares and restricted share units, which begin to vest upon the achievement of certain market criteria related to our common stock price, performance criteria and an annualized rate of return to shareholders that have not yet been met have been excluded from the computation of diluted (loss) earnings per share.

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

•	We could also be impacted if Ocwen loses, sells or transfers a significant portion of its GSE and Federal Housing Administration servicing rights or subservicing arrangements or remaining non-GSE servicing rights or subservicing arrangements and Altisource fails to be retained as a service provider

•	The contractual relationship between Ocwen and NRZ changes significantly 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

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(1)	The sum of quarterly amounts, including per share amounts, may not equal amounts reported for year-to-date periods. This is due to the effects of rounding and changes in the number of weighted average shares outstanding for each period.

(2)

During the fourth quarter of 2019, we recognized net income tax provision of $318.3 million , which included an increase in the valuation allowance in connection with the Luxembourg net operating loss carryforward of $291.5 million , the impact of a decrease in the Luxembourg statutory income tax rate on deferred taxes of $1.7 million and foreign income tax reserves of $5.6 million . During the second quarter of 2019, we recognized $12.3 million as a result of the change in the Luxembourg statutory income tax rate on deferred taxes. In addition, during the third quarter of 2018, we recognized foreign income tax reserves of $1.6 million . See Note 22 .

(3)

In July 2019, we sold the Financial Services business to TSI for $44.0 million consisting of an up-front payment of $40.0 million , subject to a working capital adjustment and transaction costs upon closing of the sale, and an additional $4.0 million payment on the one year anniversary of the sale closing. We recognized a $17.6 million pretax gain on sale in the third quarter of 2019 and a working capital true-up gain of an additional $0.3 million in the fourth quarter of 2019. In August 2018, we sold our rental property management business to RESI for total transaction proceeds of $18.0 million , $15.0 million of which was received on the closing date of August 8, 2018 and $3.0 million of which will be received on the earlier of a RESI change of control or August 8, 2023. We recognized a $13.7 million pretax gain on the sale of this business in the third quarter of 2018. See Note 4 .

(4)

During the first quarter of 2019, second quarter of 2019, third quarter of 2019 and fourth quarter of 2019, we recognized unrealized (losses) gains from our investment in RESI common shares of $2.2 million , $11.8 million , $(2.3) million and $2.7 million , respectively. During the first quarter of 2018, second quarter of 2018, third quarter of 2018 and fourth quarter of 2018, we recognized unrealized (losses) gains from our investment in RESI common shares of $(7.5) million , $1.5 million , $1.8 million and $(8.8) million , respectively. See Note 5 .

(5)

In August 2018, we initiated Project Catalyst, a restructuring plan intended to optimize our operations and reduce costs to align our cost structure with our anticipated revenues and improve our operating margins. During the first quarter of 2019, second quarter of 2019, third quarter of 2019 and fourth quarter of 2019, we recognized $4.4 million , $1.9 million , $2.8 million and $5.0 million , respectively, of severance costs, professional services fees, facility consolidation costs, technology costs and business wind down costs related to the restructuring plan. During the third quarter of 2018 and fourth quarter of 2018 we recognized $3.4 million and $8.1 million , respectively, of severance costs, professional services fees and facility consolidation costs related to the restructuring plan. See Note 24 .

(6)

In connection with the wind down of Owners.com, we wrote off $5.2 million of goodwill and $0.7 million of intangible assets during the fourth quarter of 2019. In November 2018, we announced our plans to sell the BRS Inventory and discontinue the BRS business. During the second quarter of 2019, we recognized a loss on the sale of the BRS Inventory of $1.8 million . We recognized a write-off of goodwill related to our plan to discontinue the BRS business of $2.6 million during the fourth quarter of 2018. See Note 8 .

(7)

In connection with a United States Supreme Court decision in June 2018, we analyzed our services for potential exposure to sales tax in various jurisdictions in the United States and recognized an estimated probable loss of $5.9 million and $0.4 million during the third quarter of 2018 and fourth quarter of 2018, respectively. In addition, we recognized and additional loss of $2.1 million during the first quarter of 2019 and recognized a net reimbursement from clients of $1.7 million in the third quarter of 2019. See Note 25 .

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(8)

In April 2018, we entered into the Credit Agreement, pursuant to which, among other things, we borrowed $412 million in the form of Term B Loans. Proceeds from the Term B Loans were used to repay our prior senior secured term loan. In connection with the refinancing, we recognized a loss of $4.4 million from the write-off of the unamortized debt issuance costs and debt discount in the second quarter of 2018. See Note 14 .

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ITEM 9.	CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

ITEM 9A.	CONTROLS AND PROCEDURES

ITEM 9B.	OTHER INFORMATION

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ITEM 10.	DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

ITEM 11.	EXECUTIVE COMPENSATION

ITEM 12.	SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

ITEM 13.	CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

ITEM 14.	PRINCIPAL ACCOUNTING FEES AND SERVICES

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ITEM 15.	EXHIBITS, FINANCIAL STATEMENT SCHEDULES

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SCHEDULE II.	VALUATION AND QUALIFYING ACCOUNTS

(1)	For allowance for doubtful accounts, primarily includes amounts previously written off which were credited directly to this account when recovered.

(2)	For allowance for doubtful accounts, amounts written off as uncollectible or transferred to other accounts or utilized.

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