Altisource Portfolio Solutions (ASPS) is acquiring the servicing rights to the HSBC (HSBC) REO department, laying off most of the REO staff and operating on a very small crew till November, HousingWire sources said.
British-based HSBC confirms the shift. The news is part of a long line of once-massive foreign lenders exiting the United States mortgage business. Dutch bank ABN AMRO exited in 2007. The Dutch government exited ING from the domestic mortgage bond market this year, as another example.
“HSBC made the decision earlier this year to outsource the servicing of HSBC's Consumer and Mortgage Lending REO portfolio to Altisource,” an HSBC spokesperson said.
Since Altisource already has their own network of real estate agents, assets will likely be re-assigned to them. Plus, sources noted, “States where Altisource has a real estate brokerage, all assets will be funneled through their brokerage, their real estate agents and everyone else will be locked out.”
Currently, sources said Altisource probably doesn't have the manpower to work this influx, so they are using a 3rd party outsource in India to manage these new HSBC assets.
Altisource has been under severe scrutiny lately due to a recent subpoena from the Securities and Exchange Commission to Ocwen Financial Corporation (OCN) over its close relationships and the cycle of referral business.
In 2009, Altisource spun off of Ocwen to become a publicly traded REO and title insurance company. In the February letter, New York Department Financial Services Superintendent Benjamin Lawsky questioned the relationship between the companies, all of which are chaired by Ocwen founder William Erbey.
This wouldn’t be the only recent acquisition for Altisource, it entered into a definitive agreement to acquire Mortgage Builder Software, a provider of mortgage loan origination and servicing software systems in July.
Altisource was unable to comment at the time of publication.