Real Estate Business

Foreclosures Drive 53% Of Listings Growth on Auction Site Hubzu


Site operator Altisource posts its first quarter of sequential revenue growth in nearly three years, according to a quarterly earnings call Thursday.

Inventory on the online real estate auction platform Hubzu has grown by 53 percent in the past year, following the expiration of foreclosure moratoriums and borrower protections implemented during the pandemic, site operator Altisource said Thursday in announcing first quarter earnings.

As of March 31, Altisource said there were more than 6,800 homes up for auction on Hubzu, with homes in foreclosure up 119 percent.

During the first three months of the year, industrywide foreclosure initiations were up 458 percent from a year ago, as a result of the July 31 expiration of federal foreclosure moratoriums and the Dec. 31 sunset of additional borrower protections put in place by the Consumer Financial Protection Bureau, the company said. But foreclosure initiations were still 20 percent below pre-pandemic levels despite similar delinquency levels, suggesting foreclosure filings will continue to grow.

Those statistics could foreshadow hardships for a growing number of families in the months and years ahead. But they may also point to a turnaround for Luxembourg-based Altisource, which posted its first quarter of sequential revenue growth in nearly three years.

Altisource — which owes nearly $250 million on a loan that comes due less than two years from now — reported a $12.2 million first quarter net loss, with revenue down 22 percent from a year ago, to $39.5 million.

But that’s an improvement from the $22 million net loss the company posted during the first quarter of 2021, when foreclosure protections were still in place. Altisource grew total service revenue by 2 percent from the fourth quarter, to $37.8 million. It was the first quarter-over-quarter growth in service revenue in 11 quarters, Altisource Chairman and CEO William Shepro noted in the company’s earnings announcement.

Shares in Altisource, which have traded for as little as $5.61 in the last year, rose 3.6 percent Thursday to close at $10.70 a share, mirroring similar gains by tech stocks in the NASDAQ composite index.

An integrated service provider and marketplace for the real estate and mortgage industries, Altisource also operates Equator.com, a property search site that helps investors find, acquire, and manage single-family rental properties, foreclosures, and short sales.

Last fall, Altisource also announced a deal to power investor marketplace SFRhub.com, which is geared at helping investors in single-family rental homes acquire and liquidate individual properties or entire portfolios. Altisource helping SFRhub.com create a one-stop online marketplace, by integrating rental data from RentRange, asset valuation data from Springhouse, auction services from Hubzu, closing and title services from Premium Title, and inspection and construction services.

While revenue generated by Altisource’s marketplace business is growing, it’s also a provider of technology to mortgage lenders, investors and loan servicers. The company blamed an annual drop in revenue generated by its technology solutions for mortgage lenders to an industrywide decline in mortgage originations.

With interest rates on the rise, first quarter mortgage originations were down 37 percent from a year ago, and 23 percent from the fourth quarter, Altisource said, citing a forecast by the Mortgage Bankers Association.

But Altisource’s growing customer base includes more than 250 members of Lenders One, a national alliance of independent mortgage bankers, credit unions, and real estate- and builder-affiliated firms, that each originate between $50 million to $25 billion in mortgages annually. In its most recent annual report to investors, Altisource said Lenders One membership grew by 13 percent in 2021, to 251 members.

“We are focused on becoming the premier provider of mortgage and real estate marketplaces and related technology enabled solutions to a broad and diversified customer base of residential real estate and loan investors, servicers, and originators,” the company said. “The real estate and mortgage marketplaces represent very large markets, and we believe our scale and suite of offerings provide us with competitive advantages that could support our growth.”

Although Altisource had an outstanding balance of $247.2 million on a credit agreement that comes due on April 1, 2024, it ended the first quarter with $80 million in cash and cash equivalents. That meant the company’s net debt stood at $167.3 million, down 19 percent from a year ago.

Altisource said it expects to meet its long-term liquidity requirements “with a combination of existing cash balances, cash anticipated to be generated by operating activities and anticipated proceeds from a refinancing of our credit agreement.”

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