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

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

Thank you, Michelle. Good morning and thank you for joining today's call. I plan on spending a few minutes discussing our third quarter highlights. Michelle will provide an overview of the third quarter of financial performance. And Bill will update you on our progress against our four strategic initiatives. The third quarter was an exciting quarter for Altisource. Ocwen announced the acquisition of Homeward Residential from WL Ross & Company. The acquisition will bring growth for Ocwen and Altisource, increasing the number of loans serviced by Ocwen by over 50%. Additionally, the acquisition will expand Ocwen's origination capacity, providing a sustainable source of future growth for Ocwen and a new customer for our growing origination related services business. We're also very happy with yesterday's announcement. Ocwen and Walter Investment Management Corporation presented the highest bid in the auction of ResCap Loan Servicing portfolio. As part of the acquisition, Ocwen would acquire a total of $203.7 billion of unpaid principal balance as of August 31, 2012, which would include $126.6 million of mortgage servicing rights, including $21.7 billion in Freddie Mac loans, $42 billion in Ginnie Mae loans and $62.9 billion in private label securities. It will also include sub-servicing contracts amount to $31 billion as well as $46 billion in master servicing contracts. We're also pleased with the progress we made in the Residential Asset Management business. On September 20, we filed two Form 10s to begin the process of establishing Altisource Residential and Altisource Asset Management as separate public companies. Altisource Residential, which we refer to as Residential, will be an externally managed REIT in the single family rental market. We believe Residential will achieve above market returns by acquiring non-performing loans at a lower cost than directly acquiring OREO, and two, operating with a lower cost than its…

Thank you, Bill. This morning, we reported net income attributable to shareholders to $27 million or $1.08 per diluted share for the quarter, representing a 61% increase over the third quarter of 2011 diluted earnings per share. Slides 4 and 5 provide highlights of our results for the quarter compared to prior periods. The net income growth is primarily due to stronger service revenue growth in the higher-margin Mortgage Services segment. This was given by Ocwen's servicing portfolio growth and extended capture rate of Ocwen's default related business. The growth in diluted earnings per share in excess of net income highlights the impact of the share buyback program. Compared to the second quarter of 2012, service revenues increased marginally driven by a modest increase in Mortgage Segments, partially offset by the seasonally expected decline in Financial Services. Mortgage Services' modest improvement was primarily driven by the growth in our Lenders One Membership, origination related services and Asset Management related services. Mortgage Services' related party service revenue was down slightly. This is because the average number of non-GSE loans serviced by Ocwen decreased slightly and Ocwen's June loan boarding was primarily GSE loans that generate potentially lower revenues per loan for us than non-GSE loans. September third quarter's default-related referral were in some cases deferred as Ocwen increased the timeline to initiate foreclosure filings by 10 days and HAMP 2 resulted in a temporary slowdown in modifications and foreclosures, as additional loans in foreclosure were evaluated for the extended HAMP criteria. This revenue was not lost but rather pushed into the fourth quarter. To help you better understand our revenue model, I'd like to draw you attention to the new data that we're providing in our earnings slides this quarter. In addition to the related party service revenue per loan, Slide…

Thank you, Michelle, and good morning. I plan on spending a few minutes on what we are doing to prepare Altisoure for what we expect will be substantial growth as a result of Ocwen's announced acquisition of the Homeward Residentail and ResCap platforms. Then I plan to spend a few minutes discussing a few new services we are developing and providing you with an update on our four strategic initiatives. We are preparing for the growth for the Ocwen's Homeward Residential and ResCap acquisitions will bring. We conservatively estimate that these transactions will require us to hire approximately 1600 employees and we have started the hiring process. We have both the physical and the technology capacity to add these employees as we have more than 4500 seats available. As a result, we believe we will be able to rapidly onboard and operationalize Ocwen's acquisition of these portfolios. We continue to work with Ocwen to develop new default-related services. For example, we developed an drecently began to roll out our mortgage modification title insurance services. In addition, we are working closely with OCwen to provide assistance related to short sales and deeds-in-lieu of foreclosure. There is a large opportunity to bring more transparency and efficiency to the short sale and deed-in-lieu processes. While continuing to support Ocwen's growth takes precedence, we have established four strategic initiatives to position Altisource for long-term revenue and earnings growth and customer diversification. As a reminder, the four initiatives include developing the Residential Asset business for single-family home rentals, growing our origination related services by leveraging our acquisition nof Lendes One and our investment in Correspondent One, fully developing our consumer real estate portal for distressed and non-distressed home sales and improving the Financial Services segment's earnings and growth its revenue. Turning to our strategy initiative…

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

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

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

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

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

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

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

Well, there is two sets of numbers to look at that we talked about: the $203 billion, $204 billion that we added to the platform. We also happened to be – at least for the time being – the sub-servicer for the $120 billion of Ally loans. But with respect to the percentage of the GSE loans, there will be more like 70%, 68%, 70% - any of Ginnie Mae's and some PLS, et cetera.

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

That's right.

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

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

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

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

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

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

And did that not come along with the purchase?

It did.

So what is Ocwen going to do with that platform?

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Well, that $31 billion is not Ally related.

Right, all right, yes.

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

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

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

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

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

Non, we will keep planning for further growth.

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

We don't – I don't think we …

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

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

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

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

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

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

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

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

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

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

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

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

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

Thank you very much for joining.

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