Despite its business taking a hit due to Ocwen Financial’s (OCN) regulatory troubles, Altisource Portfolio Solutions (ASPS) still reported a 3% increase in net income in 2014, with the company’s income rising from $129.97 million in 2013 to $134.49 million in 2014.

But in the fourth quarter, Altisource reported a net loss of $1.5 million, compared to net income of $35.5 million in the same time period in 2013.

The company said that the loss was due several factors, including the discontinuation of its forced-placed insurance program in November. When Altisource announced it was discontinuing the program, it cited “uncertainties with industry-wide litigation and the regulatory environment” as reasons for the move.

“Outside of the discontinuation of the lender placed insurance brokerage line of business, the fourth quarter 2014 net loss was from higher costs than in the fourth quarter of 2013, partially as a result of expenses to support anticipated business growth,” Altisource said in the release announcing its fourth quarter and year-end results. “

To quickly address the change in expectations for Ocwen's growth, the company has begun to execute on a plan that includes eliminating non-revenue generating businesses, reducing vendor fees and eliminating staff to reduce costs.

During a January call with investors, William Shepro, Altisource’s chief financial officer, and Michelle Esterman, the company’s chief financial officer, told investors that Altisource expects to generate $551 million in revenue in 2015 from providing mortgage and technology services to Ocwen’s existing portfolio of non-agency loans, but expected those figures to drop over the next several years.

“Recognizing that Ocwen is not likely to grow that much in the near term, we right-sized our organization and are realigning our expenses for this new reality,” Esterman said in January.

To “right-size” the organization, Esterman said in January that the company recently eliminated more than 800 individual employee positions and hundreds of contractors throughout the company’s “geographical footprint,” in an attempt to cut the company’s operating costs.

In the fourth quarter, Altisource also reported service revenue of $217.8 million, a 13% increase over 2013 and a diluted loss per share of $0.08 compared to diluted earnings per share of $1.42 in the fourth quarter 2013.

For the year, Altisource saw its service revenue rise 42% to $938.7 million and its diluted earnings per share rise 10% to $5.69.

"Our 2014 performance was driven by strong revenue growth. During 2014, our earnings grew at a lower rate than our revenue as we incurred expenses for people and infrastructure to support a larger Ocwen and certain longer-term initiatives that had no revenue associated with them,” Shepro said. “We developed and are implementing a plan to reduce costs and eliminate certain of these initiatives to be a leaner, more focused organization.”

Altisource also reported that it recently amended its senior secured term loan agreement and increased its borrowings by $200 million.

Altisource also noted several “highlights” in its earnings statement, including:

  • The average number of loans serviced by Ocwen on REALServicing totaled 2.2 million, a 91% increase compared to the year ended December 31, 2013 and 2.4 million for the fourth quarter 2014, a 59% increase compared to the fourth quarter 2013
  • On November 21, 2014, Altisource acquired certain assets and assumed certain liabilities of Owners Advantage, LLC (""), a leading self-directed online real estate marketplace, for an initial purchase price of $19.8 million plus contingent earn out consideration of up to an additional $7.0 million over two years, subject to achieving annual performance targets
  • On September 12, 2014, Altisource completed the acquisition of certain assets and assumed certain liabilities of Mortgage Builder Software, Inc., a provider of mortgage loan origination and servicing software systems, for an initial purchase price of $15.7 million plus contingent earn out consideration of up to an additional $7.0 million over three years, subject to Mortgage Builder achieving annual performance targets

"We have begun 2015 very focused on our customer and product diversification initiatives while continuing to support Ocwen, a very important and strategic customer to us,” Shepro added.