UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q


þ		QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


		~~For the quarterly period ended September 30, 2010~~
		OR

For the quarterly period ended March 31, 2011


o		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number 1-34354

ALTISOURCE PORTFOLIO SOLUTIONS S.A.

(Exact name of Registrant as specified in its Charter)


Luxembourg		Not applicable
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

~~2, rue Jean Bertholet~~
~~L-1233~~291, Route d’Arlon

L-1150 Luxembourg
Grand Duchy of Luxembourg
(Address of principal executive offices) (Zip Code)

+352 2469 7900
Registrant’s telephone number

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yesþ Noo

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yeso Noþo

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company (as defined in Rule 12b-2 of the Exchange Act):


Large accelerated filero	~~Accelerated filer~~o	Accelerated filerþ	Non-accelerated filerþo	Smaller reporting companyo
		(Do not check if a smaller reporting company)	~~Smaller reporting company~~o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yeso Noþ

As of ~~September 30, 2010,~~April 15, 2011, there were 25,412,748 outstanding shares of the registrant’s shares of beneficial interest.

PART I. FINANCIAL INFORMATION


Item 1.		~~Item 1.~~ Interim Condensed Consolidated Financial Statements (Unaudited)

ALTISOURCE PORTFOLIO SOLUTIONS S.A.

CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands, ~~except per share amounts)~~Except Per Share Data)


							March 31,			December 31,
	September 30,			December 31,			2011			2010
	2010			2009
ASSETS						ASSETS

Current Assets:
Cash and Cash Equivalents	$	23,037		$	30,456		$	26,324		$	22,134
Accounts Receivable, net		46,772			30,497			53,008			53,495
Prepaid Expenses and Other Current Assets		4,689			2,904			9,445			13,076
Deferred Tax Assets, net		3,532			1,546			641			551

Total Current Assets		78,030			65,403			89,418			89,256

Restricted Cash		779			—			1,222			1,045
Premises and Equipment, net		16,157			11,408			16,910			17,493
Deferred Tax Assets, net								892			1,206
Intangible Assets, net		73,230			33,719			70,292			72,428
Goodwill		15,380			9,324			11,836			11,836
Other Non-current Assets		4,331			702
Investment in Equity Affiliate								1,113			—
Other Non-Current Assets								4,708			4,536


Total Assets	$	187,907		$	120,556		$	196,391		$	197,800


LIABILITIES AND EQUITY						LIABILITIES AND EQUITY

Current Liabilities:
Accounts Payable and Accrued Expenses	$	26,960		$	24,192		$	26,606		$	35,384
Capital Lease Obligations — Current		804			536			694			680
Other Current Liabilities		6,718			5,939			6,180			5,616

Total Current Liabilities		34,482			30,667			33,480			41,680

Capital Lease Obligations — Non-current		1,008			128			689			852
Deferred Tax Liability, net		1,219			2,769
Other Non-current Liabilities		3,400			644			3,027			3,370

Commitment and Contingencies (Note 16)
Commitments and Contingencies (Note 13)

Equity:
Common Stock ($1.00 par value; 100,000 shares authorized; 25,413 shares issued and 25,327 outstanding in 2010; 24,145 shares issued and outstanding in 2009)		25,413			24,145
Common Stock ($1.00 par value; 100,000 shares authorized; 25,413 shares issued and 24,715 outstanding in 2011; 25,413 shares issued and 24,881 outstanding in 2010)								25,413			25,413
Retained Earnings		44,150			11,665			71,954			58,546
Additional Paid-in Capital		78,321			50,538
Treasury Stock, at cost ($1.00 par value; 86 shares in 2010)		(2,311	)
Additional Paid-in-Capital								80,085			79,297
Treasury Stock, at cost ($1.00 par value; 698 and 532 shares in 2011 and 2010, respectively)								(19,798	)		(14,418	)

Altisource Equity		145,573			86,348			157,654			148,838

Non-controlling Interests		2,225			—			1,541			3,060


Total Equity		147,798			86,348			159,195			151,898


Total Liabilities and Equity	$	187,907		$	120,556		$	196,391		$	197,800

ALTISOURCE PORTFOLIO SOLUTIONS S.A.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands, ~~except per share amounts)~~Except Per Share Data)


													Three Months Ended
	Three Months Ended						Nine Months Ended						March 31,
	September 30,						September 30,						2011			2010
	2010			2009			2010			2009
Revenue	$	77,580		$	54,064		$	209,901		$	146,486		$	88,670		$	60,974
Cost of Revenue		48,647			33,453			131,749			91,805			54,949			39,354


Gross Profit		28,933			20,611			78,152			54,681			33,721			21,620
Selling, General and Administrative Expenses		14,996			11,065			40,168			27,216			16,254			12,069


Income from Operations		13,937			9,546			37,984			27,465			17,467			9,551

Other Income (Expense), net		698			2,546			666			1,155			344			(72	)


Income Before Income Taxes and Non-controlling Interests		14,635			12,092			38,650			28,620			17,811			9,479

Income Tax Provision		(2,751	)		(3,448	)		(2,029	)		(8,522	)		(1,687	)		(2,385	)


Net Income		11,884			8,644			36,621			20,098			16,124			7,094

Net Income Attributable to Non-controlling Interests		(2,052	)		—			(4,136	)		—			(1,299	)		(787	)


Net Income Attributable to Altisource	$	9,832		$	8,644		$	32,485		$	20,098		$	14,825		$	6,307


Earnings Per Share
Earnings Per Share:
Basic	$	0.39		$	0.36		$	1.30		$	0.84		$	0.60		$	0.26

Diluted	$	0.37		$	0.36		$	1.24		$	0.83		$	0.57		$	0.25


Weighted Average Shares Outstanding
Weighted Average Shares Outstanding:
Basic		25,318			24,050			25,080			24,050			24,845			24,690

Diluted		26,544			24,303			26,168			24,303			25,928			25,663


Transactions with Related Parties included above:
Revenue	$	39,459		$	26,035		$	104,494		$	67,222		$	48,790		$	29,251

Selling, General and Administrative Expenses	$	223		$	522		$	811		$	4,308		$	391		$	324

Interest Expense	$	—		$	193		$	—		$	1,290

ALTISOURCE PORTFOLIO SOLUTIONS S.A.

CONDENSED CONSOLIDATED ~~STATEMENT~~STATEMENTS OF EQUITY
(in thousands)


																				Altisource Equity												Non-
							Additional		Treasury															Retained			Additional		Treasury			controlling						Comprehensive
					Retained		Paid-in		Stock, at			Non-controlling						Comprehensive		Common Stock				Earnings			Paid-in Capital		Stock, at Cost			Interests			Total			Income
	Common Stock				Earnings		Capital		Cost			Interests			Total			Income
Balance, December 31, 2009		24,145	$	24,145	$	11,665	$	50,538	$	—		$	—		$	86,348					24,145	$	24,145	$	11,665		$	50,538	$	—		$	—		$	86,348		$	—

Net Income		—		—		32,485		—		—			4,136			36,621		$	36,621		—		—		6,307			—		—			787			7,094			6,307
Acquisition of The Mortgage Partnership of America, L.L.C.		959		959		—		22,941		—			3,268			27,168			—
Acquisition of MPA																					959		959		—			22,941		—			3,268			27,168			—
Contributions from Non-controlling Interest Holders																					—		—		—			—		—			2			2			—
Distributions to Non-controlling Interest Holders																					—		—		—			—		—			(2,420	)		(2,420	)		—
Share-based compensation																					—		—		—			271		—			—			271			—
Exercise of stock options																					101		101		—			1,014		—			—			1,115			—

Balance, March 31, 2010																					25,025		25,025		17,972			74,764		—			1,637			119,578			6,307


Balance, December 31, 2010																					25,413		25,413		58,546			79,297		(14,418	)		3,060			151,898			—
Net Income																					—		—		14,825			—		—			1,299			16,124			14,825
Contributions from Non-controlling Interest Holders		—		—		—		—		—			28			28			—		—		—		—			—		—			6			6			—
Distributions to Non-controlling Interest Holders		—		—		—		—		—			(5,207	)		(5,207	)		—		—		—		—			—		—			(2,824	)		(2,824	)		—
Share-based Compensation Expense		—		—		—		2,134		—			—			2,134			—		—		—		—			788		—			—			788			—
Exercise of Stock Options		298		298		—		2,708		—			—			3,006			—		—		—		(1,417	)		—		1,858			—			441			—
Delivery of Vested Restricted Stock		11		11		—		—		—			—			11			—
Repurchase of Shares		—		—		—		—		(2,311	)		—			(2,311	)		—		—		—		—			—		(7,238	)		—			(7,238	)		—

Balance, September 30, 2010		25,413	$	25,413	$	44,150	$	78,321	$	(2,311	)	$	2,225		$	147,798		$	36,621
Balance, March 31, 2011																					25,413	$	25,413	$	71,954		$	80,085	$	(19,798	)	$	1,541		$	159,195		$	14,825

ALTISOURCE PORTFOLIO SOLUTIONS S.A.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)


	Nine Months Ended						Three Months Ended
	September 30,						March 31,
	2010			2009			2011			2010
Cash flows from Operating Activities:
Cash Flows from Operating Activities:
Net Income	$	36,621		$	20,098		$	16,124		$	7,094
Reconciling Items:
Depreciation and Amortization		5,015			4,188			1,938			1,523
Amortization of Intangible Assets		4,089			2,004			1,273			1,189
Share-based Compensation Expense		2,134			—			788			271
Bad Debt Expense								1,280			241
Deferred Income Taxes		(1,040	)		(1,414	)		224			551
Changes in Operating Assets and Liabilities, net of MPA Acquisition:
Changes in Operating Assets and Liabilities, net of Acquisition:
Accounts Receivable		(13,031	)		(8,810	)		(793	)		4,886
Prepaid Expenses and Other Current Assets		(1,464	)		505			687			(405	)
Other Assets		(2,594	)		(579	)		(172	)		(990	)
Accounts Payable and Accrued Expenses		1,422			2,237			(4,971	)		4,863
Other Current and Non-current Liabilities		2,109			8,157			221			462


Net Cash Flow from Operating Activities		33,261			26,386			16,599			19,685


Cash flows from Investing Activities:
Cash Flows from Investing Activities:
Additions to Premises and Equipment, net		(8,135	)		(3,787	)		(1,355	)		(3,613	)
Acquisition of Business, net of Cash Acquired		(26,830	)		—
Acquisition of Business, net of cash acquired								—			(25,462	)
Investment in Equity Affiliate								(1,113	)		—
Change in Restricted Cash		(779	)		—			(177	)		—


Net Cash Flow from Investing Activities		(35,744	)		(3,787	)		(2,645	)		(29,075	)


Cash flows from Financing Activities:
Cash Flows from Financing Activities:
Principal Payments on Capital Lease Obligations		(463	)		(422	)		(149	)		(143	)
Payments of Line of Credit		—			(1,123	)
Proceeds from Stock Option Exercises		3,017			—			441			1,115
Purchase of Treasury Stock		(2,311	)		—			(7,238	)		—
Contributions from Non-controlling Interests		28			—			6			2
Distributions to Non-controlling Interests		(5,207	)		—			(2,824	)		(2,420	)
Net Distribution to Parent		—			(3,332	)


Net Cash Flow from Financing Activities		(4,936	)		(4,877	)		(9,764	)		(1,446	)


Net (Decrease) Increase in Cash and Cash Equivalents		(7,419	)		17,722
Cash and Cash Equivalents at the Beginning of the Year		30,456			6,988
Net Increase (Decrease) in Cash and Cash Equivalents								4,190			(10,836	)
Cash and Cash Equivalents at the Beginning of the Period								22,134			30,456


Cash and Cash Equivalents at the End of the Period	$	23,037		$	24,710		$	26,324		$	19,620


Supplemental Cash Flow Information
Supplemental Cash Flow Information:
Interest Paid	$	—		$	25		$	21		$	—
Income Taxes Paid	$	1,724		$	534		$	563		$	25

Non-Cash Investing and Financing Activities
Shares Issued in Connection with MPA Acquisition	$	23,900		$	—
Increase in Common Stock due to the Company’s Conversion to a Luxembourg Société Anonyme	$	—		$	3,283
Non-cash Investing and Financing Activities:
Shares issued in connection with acquisition							$	—		$	23,900
Reduction in Income Tax Payable from Tax Amortizable Goodwill							$	863		$	—

ALTISOURCE PORTFOLIO SOLUTIONS S.A.

~~Notes to Condensed Consolidated Financial Statements~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 — ORGANIZATION AND BASIS OF PRESENTATION

Altisource Portfolio Solutions S.A. (which may be referred to as Altisource, the Company, we, us or our), together with its subsidiaries is a provider of services focused on high value, technology-enabled, knowledge-based functions principally related to real estate and mortgage portfolio management, asset recovery and customer relationship management. Utilizing integrated technology that includes decision models and behavioral based scripting engines, ~~we provide~~the Company provides solutions that improve clients’ performance and maximizes their returns.

We are publicly traded on the NASDAQ Global Select market under the symbol ASPS. We were incorporated under the laws of Luxembourg on November 4, 1999 as Ocwen Luxembourg S.à ~~r.l.~~.r.l., renamed Altisource Portfolio Solutions S.à ~~r.l.~~.r.l. on May 12, 2009 and converted into Altisource Portfolio Solutions S.A. on June 5, 2009. We became a publicly traded company as of August 10, 2009 ~~see~~(the “Separation” ~~below.~~

~~In February 2010, we acquired all of the outstanding membership interests of The Mortgage Partnership of America, L.L.C. (“MPA”~~). ~~MPA was formed as a Missouri limited liability company~~Prior to ~~serve as~~ the ~~manager~~Separation, our businesses were wholly-owned subsidiaries of ~~Best Partners Mortgage Cooperative, Inc.~~Ocwen Financial Corporation (“~~BPMC”~~Ocwen”) doing business as Lenders One Mortgage Cooperative (“Lenders One”). Lenders One is a national alliance of independent mortgage bankers (“Members”) that provides its Members with education and training along with revenue enhancing, cost reducing and market share expanding opportunities (see Note 3).

We conduct our operations through three reporting segments: Mortgage Services, Financial Services and Technology ~~Products.~~Services. In addition, we report our corporate related expenditures as a separate segment (see Note 1514 for a description of our business segments).

~~Separation~~

On August 10, 2009 (the “Separation Date”), we became a stand-alone public company in connection with our separation from Ocwen Financial Corporation (“Ocwen”) (the “Separation”). Prior to the Separation, our businesses were wholly-owned subsidiaries of Ocwen. On the Separation Date, Ocwen distributed all of the Altisource common stock to Ocwen’s shareholders (the “Distribution”). Ocwen’s shareholders received one share of Altisource common stock for every three shares of Ocwen common stock held as of August 4, 2009 (the “Record Date”). In addition, holders of Ocwen’s 3.25% Contingent Convertible Unsecured Senior Notes due 2024 received one share of Altisource common stock deemed held on an as if converted basis. For such notes, the conversion ratio of 82.1693 shares of Ocwen common stock for every $1,000 in aggregate principal amount of notes held on the Record Date was calculated first, and then we applied the distribution ratio of one share of Altisource common stock for every three shares of Ocwen common stock on an as converted basis to determine the number of shares each note holder received.

In connection with the Separation, we entered into various agreements with Ocwen that define our relationship after the Separation including a Separation Agreement, a Tax Matters Agreement, an Employee Matters Agreement, an Intellectual Property Agreement, a Data Center and Disaster Recovery Agreement, a Technology Products Services Agreement, a Transition Services Agreement and certain long-term servicing contracts (collectively, the “Agreements”).

Basis of Presentation

Our historical financial statements include the assets and liabilities (accounted for at the historical values carried by Ocwen prior to the Separation), revenues and expenses directly attributable to our operations. Beginning August 10, 2009, after our assets and liabilities were formally contributed by Ocwen pursuant to the terms of a Separation Agreement, our financial statements have been presented on a consolidated basis for financial reporting purposes. Our condensed consolidated financial statements include the assets and liabilities, revenues and expenses directly attributable to our operations. All significant inter-company and inter-segment transactions and accounts have been eliminated upon consolidation.

~~For periods~~ Certain amounts disclosed in prior period statements have been reclassified to conform to the ~~Separation Date, these condensed consolidated financial statements include allocations~~current period presentation.

In February 2010, we acquired Mortgage Partnership Association (“MPA”), the manager of ~~expenses from Ocwen for corporate functions including insurance, employee benefit plan expense~~a national alliance of community mortgage bankers, correspondent lenders and ~~allocations for certain centralized administration costs for executive management, treasury, real estate, accounting, auditing, tax, risk management, internal audit, human resources~~suppliers of mortgage products and ~~benefits administration (See Note 2).~~

The condensed consolidated financial statements for the three and nine months ended September 30, 2009 also do not necessarily reflect what the Company’s condensed consolidated results of operations, financial position and cash flows would have been had the Company operatedservices that does business as an independent company during that entire period. For instance, as an independent public company, we incur costs in excess of those allocated by Ocwen for maintaining a separate Board of Directors, obtaining a separate audit, relocating certain executive management and hiring additional personnel.

~~- 7 -~~

~~ALTISOURCE PORTFOLIO SOLUTIONS S.A.~~
~~Notes to Condensed Consolidated Financial Statements~~
~~(continued)~~

~~Prior to our acquisition of MPA, MPA and~~ Lenders One ~~entered into a management agreement that ends on December 31, 2025. MPA was formed to act on behalf of~~ Mortgage Cooperative (“Lenders One and its Members principally to provide its Members with education and training along with revenue enhancing, cost reducing and market share expanding opportunities. For providing these services MPA receives payment from Lenders One, and in some instances the vendors, based upon the benefits achieved for the Members.One”). The management agreement provides MPA with broad powers such as recruiting members for Lenders One, collection of fees and other obligations from Members of Lenders One, processing of all rebates owed to Lenders One, day-to-day operation of Lenders One and negotiation of contracts with vendors including signing contracts on behalf of Lenders One.

~~The management agreement~~Management Agreement between MPA and Lenders One, pursuant to which MPA is the management company of Lenders One, represents a variable interest in a variable interest entity. MPA determined that they are the primary beneficiary of Lenders One as they have the power to direct the activities that most significantly impact Lenders One’s economic performance and the obligation to absorb losses or the right to receive ~~benefits.~~benefits from Lenders One. As a result, Lenders One is presented in the accompanying condensed consolidated financial statements on a consolidated basis with the interests of the ~~Members~~members reflected as Non-controlling ~~Interest~~Interests on the Condensed Consolidated Balance Sheets. At ~~September 30, 2010,~~March 31, 2011, Lenders One had total assets of ~~$6.2~~$3.7 million and liabilities of $0.2 million.

We have prepared our condensed consolidated financial statements in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of SEC Regulation S-X. Accordingly, they do not include all of the information and notes required by GAAP for complete ~~condensed~~ consolidated financial statements. In the opinion of management, all normal recurring adjustments considered necessary to fairly state the results for the interim periods presented have been included. The preparation of condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of our condensed consolidated financial statements, as well as the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates.

These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto contained in our Form 10-K for the year ended December 31, 2010, filed with the SEC on ~~March 17, 2010~~February 18, 2011, which contains a summary of our significant accounting policies. Certain footnote detail is also omitted from the condensed consolidated financial statements unless there is a material change from the information included in the Form 10-K.

Investment in Equity Affiliate

We utilize the equity method to account for investments in equity securities where we have the ability to exercise significant influence over operating and financial policies of the investee. We include a proportionate share of earnings and/or losses of equity method investees in equity income (loss), net in the condensed consolidated statements of operations. As of March 31, 2011 our only significant equity investment was Correspondent One S.A. (“Correspondent One”) which is in the formation process and therefore had no impact to our consolidated operations.

ALTISOURCE PORTFOLIO SOLUTIONS S.A.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(continued)

Foreign Currency Translation

Our reporting currency is the U.S. dollar. Other foreign currency assets and liabilities that are considered monetary items are translated at exchange rates in effect at the balance sheet date. Foreign currency revenues and expenses are translated at transaction date exchange rates. These exchange gains and losses are included in the determination of net income.

Fair Value of Financial Instruments

The fair value of financial instruments, which primarily include Cash and Cash Equivalents, ~~Restricted Cash,~~ Accounts Receivable, net, Restricted Cash and Accounts Payable and Accrued Expenses at ~~September 30, 2010~~March 31, 2011 and December 31, ~~2009,~~2010 are carried at amounts that approximate their fair value due to the short-term nature of these amounts.

~~In addition, we entered into~~Additionally, a put option arrangement ~~with some of~~was issued to the predecessor owners of ~~MPA in conjunction with the acquisition.~~MPA. The arrangement allows the holders to put a portion of the Altisource shares issued as consideration to Altisource at a predetermined price. ~~Altisource calculated the fair value of this put option arrangement on the acquisition date at $1.3 million by utilizing a Black-Scholes option pricing model (see Note 3).~~ The fair value calculation is deemed to be a Level 3 calculation. The fair value of the put ~~at September 30, 2010~~as of ~~$0.8~~March 31, 2011 of $0.4 million was valued using the following assumptions:


	Assumptions

Risk-free Interest Rate		~~0.19% — 0.96~~0.3% – 1.29	%
Expected Stock Price Volatility		~~35% — 58~~29% – 49	%
Expected Dividend Yield		—
Expected Option Life (in years)		~~0.5 — 3.5~~1 – 3
Contractual Life (in years)		—
Fair Value	$	~~0.01 — $3.88~~0.05 – $2.32

~~- 8 -~~

~~ALTISOURCE PORTFOLIO SOLUTIONS S.A.~~
~~Notes to Condensed Consolidated Financial Statements~~
~~(continued)~~

The put option agreement is a written derivative valued similar to stock options and is included within ~~“Other~~Other Non-current ~~Liabilities”~~Liabilities on the Condensed Consolidated Balance Sheet. The fair value of the put option agreements will be determined each quarter until such puts are either exercised or forfeited with any changes in value included as a component of ~~“Other~~Other Income (Expense), ~~net”~~net in the Condensed Consolidated Statements of Operations.

NOTE 2 — TRANSACTIONS WITH RELATED PARTIES

Ocwen remains our largest customer. Following the Separation, Ocwen is contractually obligated to purchase certain Mortgage Services and Technology ~~Products~~Services from us under service agreements. These agreements extend for eight years from the Separation Date, subject to termination under certain provisions. Ocwen is not restricted from redeveloping these services. We settle amounts with Ocwen on a daily, weekly or monthly basis based upon the nature of the services and when the service is completed.

We consider certain services to be derived from Ocwen’s loan servicing portfolio rather than provided to Ocwen because such services are charged to the mortgagee and/or the investor and are not expenses to Ocwen. Ocwen, or services derived from Ocwen’s loan servicing portfolio, as a percentage of each of our segment revenues and as a percentage of consolidated revenues was as follows for the three ~~and nine~~ months ended ~~September 30:~~March 31:


	Three Months Ended						Nine Months Ended						Three Months Ended
	September 30,						September 30,						March 31,
	2010			2009			2010			2009			2011			2010
Mortgage Services		65	%		72	%		66	%		73	%		73	%		77	%
Technology Products		36	%		41	%		36	%		45	%
Technology Services														39			37
Financial Services		<1	%		<1	%		<1	%		<1	%		< 1			< 1
Consolidated Revenues		51	%		48	%		50	%		46	%		55	%		48	%

~~The condensed consolidated financial statements~~January 1, 2011, we modified our pricing for IT Infrastructure Services within our Technology Services segment from a rate card model primarily based on headcount to a fully loaded costs plus mark-up methodology. This new model applies to the amounts charged to Ocwen as well as internal allocations of infrastructure costs. This resulted in reduced revenues for the ~~three~~Technology Services segment and nine months ended September 30, 2009 include allocations of expenses from Ocwen for corporate functions including insurance, employee benefit plan expense and allocations for certain centralized administration costs for executive management, treasury, real estate, accounting, auditing, tax, risk management, internal audit, human resources and benefits administration. Ocwen determined these allocations using proportional cost allocation methods including the use of relevant operating profit, fixed assets, sales and payroll measurements. Specifically, personnel and all associated costs, including compensation, benefits, occupancy and other costs, were allocated based on the estimated percentage of time spent by the individual in the various departments. External costs such as audit fees, legal fees, business insurance and other were allocated based on a combination of the sales, fixed assets and operating profits of the department whichever is most appropriate given the nature of the expense. Total corporate costs allocated to the Company, were $4.3 million for the nine months ended September 30, 2009 ($0.5 million for the 2009 third quarter). The charges for these functions are included primarily in Selling, General and Administrative Expenses in the Condensed Consolidated Statements of Operations. However, these amounts may not be representative of the costs necessary for the Company to operate as a separate standalone entity.consolidated basis.

~~ALTISOURCE PORTFOLIO SOLUTIONS S.A.~~
~~Notes to Condensed Consolidated Financial Statements~~
~~(continued)~~

treasury, accounting, ~~tax,~~ risk management, legal, strategic planning, compliance and other areas are provided to the counterparty for up to two years from the ~~Separation Date.~~date of Separation. For the ~~nine months~~quarters ended ~~September 30,~~March 31, 2011 and March 31, 2010, Altisource billed Ocwen ~~$1.2~~$0.4 million ~~($0.5~~and $0.4 million, ~~for the third quarter),~~respectively, and Ocwen billed Altisource ~~$0.8~~$0.4 million ~~($0.2~~and $0.3 million, ~~for the third quarter)~~respectively, for services provided under this agreement. These amounts are reflected as a component of Selling, General and Administrative expenses in the Condensed Consolidated Statements of Operations.

NOTE 3 — ~~ACQUISITION OF MPA~~

In February 2010, we acquired all of the outstanding membership interests of MPA pursuant to a Purchase and Sale Agreement. MPA serves as the manager of Lenders One, a national alliance of independent mortgage bankers. The alliance was established in 2000 and as of September 30, 2010 consisted of more than 170 members.

~~Consideration for the transaction consisted of cash, common stock and put option agreements:~~

(in thousands) Consideration
Cash $ 29,000
Common Stock 23,900
Put Option Agreements at Fair Value 1,289
Working Capital Adjustment 835

Total Consideration $ 55,024

The common stock consisted of 959,085 shares of Altisource’s common stock valued at $24.92 per share based on the closing price of Altisource common stock on February 11, 2010. A portion of which (314,135 shares) will be held in escrow two years from the closing date of the acquisition to secure MPA’s indemnification obligations under the Purchase and Sale Agreement. In addition, we entered into three put option agreements with certain of the sellers whereby each seller has the right, with respect to an aggregate of 0.5 million shares of our common stock, to put up to 25% of eligible shares each year for a total of four years at a price equal to $16.84 per share. The fair value of the put was initially established at the date of acquisition ($1.3 million) using the following assumptions:


	~~Assumptions~~
~~Risk-free Interest Rate~~		~~0.345% — 1.914~~	%
~~Expected Stock Price Volatility~~		~~40% — 55~~	%
~~Expected Dividend Yield~~		—
~~Expected Option Life (in years)~~		~~1 — 4~~
~~Contractual Life (in years)~~		—
~~Fair Value~~	$	~~0.74 — $3.90~~

~~- 10 -~~

~~ALTISOURCE PORTFOLIO SOLUTIONS S.A.~~
~~Notes to Condensed Consolidated Financial Statements~~
~~(continued)~~

~~The preliminary allocation of the purchase price is as follows:~~

(in thousands)
Cash $ 2,170
Accounts Receivable 4,279
Prepaid Expenses and Other Current Assets 321
Premises and Equipment 18
Identifiable Intangible Assets 43,600
Goodwill 10,218

60,606
Accounts Payable and Accrued Expenses (2,176 )
Other Current Liabilities (138 )
Non-controlling Interests (3,268 )

Total Purchase Price $ 55,024

During the second quarter of 2010, Altisource finalized its calculation of the Working Capital Adjustment within the 90 day period allocated by the purchase contract. The value was revised from $2.1 million to $0.8 million resulting in an offsetting decrease to Goodwill. The payment of the Working Capital Adjustment was made during the third quarter.

~~Management has assigned the following lives to identified assets acquired as a result of the acquisition:~~


	~~Estimated Life~~
	~~(in Years)~~
~~Premises and Equipment~~		~~2 — 5~~
~~Management Agreement~~⁽¹⁾		15
~~Trademarks~~⁽¹⁾		15
~~Non-compete~~⁽¹⁾		4
~~Goodwill~~	~~Indefinite~~


~~(1)~~		~~The identifiable assets are subject to amortization on a straight-line basis as this best approximates the benefit period related to these assets.~~

The goodwill arising from the acquisition, which was assigned to our Mortgage Services segment, consists of various components principally in-place workforce and anticipated revenue synergies given MPA’s market presence and future enhancements to our services including the development of origination services. All goodwill and intangible assets related to the acquisition of MPA are expected to be amortizable and deductible for income tax purposes.

~~We entered into employee agreements with certain key employees of MPA who also received the majority of our shares issued in connection with the acquisition.~~

~~Revenue and Net Income Attributable to Altisource from the date of acquisition through September 30, 2010, included in the Company’s Condensed Consolidated Statements of Operations, are as follows.~~

Three Months Ended Nine Months Ended
(in thousands) September 30, 2010 September 30, 2010
Revenue $ 5,585 $ 11,412
Net Income Attributable to Altisource 1,768 1,812

~~Acquisition-related transaction costs are included in Selling, General and Administrative and Expenses in the Condensed Consolidated Statements of Operations.~~

~~- 11 -~~

ALTISOURCE PORTFOLIO SOLUTIONS S.A.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(continued)

NOTE 98 — EQUITY BASED COMPENSATION

We provide stock-based awards as a form of compensation for ~~certain~~ employees and officers. We have issued stock-based awards in the form of stock options and restricted stock units. We recorded total stock compensation expense of ~~$2.1~~$0.8 million for the ~~nine~~three months ended ~~September 30, 2010 ($1.2 million for the quarter).~~March 31, 2011. The compensation expense is included in Selling, General and Administrative Expenses in the accompany Condensed Consolidated Statements of Operations.

~~During~~Below is a summary of the ~~nine months ended September 30, 2010, the Company~~different types of stock-based awards issued under our stock plans:

Stock Options

Service-based Options.These options are granted ~~0.9 million stock options with exercise prices ranging between $22.00 and $25.00 per share depending~~at fair market value on the ~~grant date.~~date of grant. The ~~vesting schedule for the~~ options ~~has a time-based component, in which 25% of the options~~generally vest ~~in equal increments~~ over four years with equal annual cliff-vesting and ~~a market-based component, in~~expire on the earlier of 10 years after the date of grant or 3 months after termination of service. A total of 1.1 million service-based awards were outstanding at March 31, 2011.

Market-based Options.These option grants have two components each of which ~~up to 75% of the options could~~ vest ~~in equal increments over three years commencing~~only upon the achievement of certain ~~performance criteria related~~criteria. The first component, which we refer to ~~our stock price and the annualized rate~~internally as “ordinary performance” grants, consists of ~~return to investors. Two-thirds~~two-thirds of the market-based ~~options would begin~~grant and begins to vest ~~over three years~~ if the stock price realizes a compounded annual gain of at least 20% over the exercise price, so long as the stock price is at least double the exercise price. The remaining third of the market-based options, which we refer to internally as “extraordinary performance” grants, would ~~begin to~~ vest over three years if the stock price realizes a compounded annual gain of at least 25% ~~gain,~~over the exercise price, so long as ~~the stock price~~it is at least triple the exercise price. The vesting schedule for all market-based awards is 25% upon achievement of the criterion and the remaining 75% in three equal annual installments. A total of 2.2 million market-based awards were outstanding at March 31, 2011.

During the three months ended March 31, 2011, the Company granted 0.1 million stock options. The options have an average exercise price of $29.14 per share.

The fair value of the ~~time-based~~service-based options was determined using the Black-Scholes options pricing model while a lattice (binomial) model was used to determine the fair value of the market-based options using the following assumptions as of the grant date:


							March 31, 2011						March 31, 2010
							Black-						Black-
(in thousands)							Scholes			Binomial			Scholes			Binomial
	Black-Scholes			Binomial
Risk-free Interest Rate		2.82% — 3.20	%		0.02% — 3.66	%		2.38	%		0.06 – 3.36	%		1.90	%		0.02 – 3.66	%
Expected Stock Price Volatility		48	%		52	%		48	%		56	%		36	%		24 – 41	%
Expected Dividend Yield		—			—			—			—			—			—
Expected Option Life (in years)		7			—			6.25			—			5			—
Contractual Life (in years)		—			10			—			14			—			10
Fair Value	$	11.71 — $13.00		$10.05 and $12.35			$14.18 and $14.82			$	15.41 – $16.76		$	6.80		$7.35 and $8.48

~~ALTISOURCE PORTFOLIO SOLUTIONS S.A.~~
~~Notes to Condensed Consolidated Financial Statements~~
~~(continued)~~

The following table summarizes activity of our stock options:

Weighted Weighted
Average
Average Contractual Aggregate
Number of Exercise Term Intrinsic Value
Options Price (in years) (in thousands)
Outstanding at December 31, 2009 3,190,639 $ 9.90
Granted 907,500 23.54
Exercised (298,166 ) 10.08
Forfeited (209,042 ) 12.24

Outstanding at September 30, 2010 3,590,931 13.21 7.4 $ 64,401

Exercisable at September 30, 2010 1,175,296 $ 9.79 5.3 $ 25,087

~~Restricted Shares~~

~~The following table summarizes activity of our restricted shares~~

Weighted
Average
Restricted Grant Date
Shares Fair Value
Outstanding at December 31, 2009 3,236 $ 18.00
Granted — —
Forfeited — —
Vested (3,236 ) $ 18.00

Outstanding at September 30, 2010 — —


						Weighted
				Weighted		Average		Aggregate
				Average		Contractual		Intrinsic
	Number of			Exercise		Term		Value
	Options			Price		(in years)		(in thousands)

Outstanding at December 31, 2010		3,451,613		$	13.46		7.3		52,641
Granted		70,000			29.14
Exercised		(114,136	)		14.36
Forfeited		(31,250	)		22.01

Outstanding at March 31, 2011		3,376,227		$	13.67		7.3	$	57,415


Exercisable at March 31, 2011		1,242,586		$	9.83		6.1	$	25,912

Stock Repurchase Authorization

On May 19, 2010, our shareholders authorized us to purchase up to ~~3,784,618~~3.8 million shares of our common stock in the open market. ~~During the third quarter of 2010,~~From authorization through March 31, 2011, we purchased ~~86,098~~0.9 million shares of our common stock on the open market at an average price of ~~$26.81,~~$27.85, leaving ~~3,698,520~~2.9 million shares still available for purchase. ~~Subsequently, during October 2010, we purchased an additional 65,317 shares. As of October 25, 2010, we have repurchased a total of 151,415 shares at an average share price of $26.39.~~

NOTE 109 — COST OF REVENUE

Cost of ~~revenue~~Revenue principally includes payroll and employee benefits associated with personnel employed in customer service and operations ~~roles,~~roles; fees paid to external providers related to provision of services, reimbursable expenses and technology and telephony expenses as well as depreciation and amortization of operating assets. The components of ~~cost~~Cost of ~~revenue~~Revenue were as follows for the periods ended ~~September 30, 2010~~March 31, 2011 and ~~2009:~~2010:


	Three Months Ended
	March 31,
(in thousands)	2011		2010

Compensation and Benefits	$	16,840	$	13,999
Outside Fees and Services		18,161		12,460
Expense Reimbursements		15,641		8,530
Technology and Communications		4,307		4,365


Total	$	54,949	$	39,354

~~- 16 -~~

ALTISOURCE PORTFOLIO SOLUTIONS S.A.
~~Notes to Condensed Consolidated Financial Statements~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(continued)

Three Months Ended Nine Months Ended
September 30, September 30,
(in thousands) 2010 2009 2010 2009
Compensation and Benefits $ 15,828 $ 13,735 $ 45,518 $ 39,612
Outside Fees and Services 15,311 10,550 41,092 31,502
Reimbursable Expenses 13,369 5,680 33,040 9,009
Technology and Communications 4,139 3,488 12,099 11,682

Total $ 48,647 $ 33,453 $ 131,749 $ 91,805

NOTE 1110 — SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

Selling, ~~general~~General and ~~administrative~~Administrative expenses include payroll, employee benefits, occupancy and other costs associated with personnel employed in executive, sales, marketing, human resources ~~consumer behavior, internal audit~~ and finance roles. This category also includes professional fees, depreciation and amortization on non-operating assets. The components of ~~selling, general~~Selling, General and ~~administrative~~Administrative expenses were as follows for the periods ended ~~September 30, 2010~~March 31, 2011 and ~~2009:~~2010:


	Three Months Ended				Nine Months Ended				Three Months Ended
	September 30,				September 30,				March 31,
(in thousands)	2010		2009		2010		2009		2011		2010

Compensation and Benefits	$	5,251	$	521	$	13,256	$	4,307	$	5,920	$	4,040
Professional Services		1,812		4,158		5,869		7,514		2,102		2,296
Occupancy Related Costs		4,733		1,976		10,845		6,086		3,333		2,353
Amortization of Intangible Assets		1,450		668		4,089		2,004		1,273		1,189
Other		1,750		3,742		6,109		7,305		3,626		2,191


Total	$	14,996	$	11,065	$	40,168	$	27,216	$	16,254	$	12,069

ALTISOURCE PORTFOLIO SOLUTIONS S.A.
~~Notes to Condensed Consolidated Financial Statements~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(continued)

utilized in the consolidated U.S. federal tax return. The provision for income taxes prior to the Separation Date has been determined on a pro-forma basis as if we had filed separate income taxes under our current structure for the periods presented.

The Company revised its estimated effective tax rate related to 2010 operations for the full year to 12.5% in the second quarter of 2010. The revised estimate was due to the receipt of a favorable ruling in June 2010 regarding the treatment of certain intangibles that exist for purposes of determining the Company’s taxable income. The ruling is retroactive to the Separation Date. As a result of the ruling, the Company recognized a $3.4 million credit attributable to 2009 in the second quarter 2010 which is not included in the estimate of the full year effective tax rate. Income tax provision on income before income tax differs from amounts that would be computed by applying the Luxembourg federal corporate income tax rate of 28.6% primarily because of the effect of enacted tax statutes in multiple jurisdictions, the treatment of intangibles for tax purposes and differing tax rates outside of Luxembourg. This ruling did not have a material impact on our deferred tax assets or liabilities.

The Distribution was intended to be a tax-free transaction under Section 355 of the Internal Revenue Code (the “Code”). To the extent Ocwen recognizes tax under Section 355 of the Code, Altisource has agreed to indemnify Ocwen. We do not believe we have a material obligation under this indemnity as separately Ocwen recognized substantially all of the gain it has in the assets that comprise Altisource as a result of the restructuring in accordance with other provisions of the Code.

NOTE 1412 — EARNINGS PER SHARE

Basic earnings per share (“EPS”) is computed by dividing income available to common stockholders by the weighted average number of common shares outstanding for the period. Diluted EPS reflects the assumed conversion of ~~all~~ dilutive securities. On August 10, 2009, the Distribution by Ocwen was completed to the Ocwen stockholders of one share of Altisource common stock for every 3 shares of Ocwen common stock held as of August 4, 2009. In addition, holders of Ocwen’s 3.25% Contingent Convertible Unsecured Senior Notes due 2024 received one share of Altisource common stock deemed held on an as if converted basis. For such notes, the conversion ratio of 82.1693 shares of Ocwen common stock for every $1,000 in aggregate principal amount of notes held on August 4, 2009 was calculated first, and then we applied the distribution ratio of one share of Altisource common stock for every three shares of Ocwen common stock on an as converted basis to determine the number of shares each note holder received.

Basic and diluted earnings per share for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2011 and 2010 ~~and 2009~~ are calculated as follows:

Three Months Ended Three Months Ended
September 30, 2010 September 30, 2009
Weighted Weighted
Ave. Ave.
(in thousands, except per share amounts) Income Shares Per Share Income Shares Per Share
Basic $ 9,832 25,318 $ 0.39 $ 8,644 24,050 $ 0.36

Effect of Dilutive Securities:
Stock Options — 1,226 — 253

Diluted $ 9,832 26,544 $ 0.37 $ 8,644 24,303 $ 0.36

Nine Months Ended Nine Months Ended
September 30, 2010 September 30, 2009
Weighted Weighted
Ave. Ave.
(in thousands, except per share amounts) Income Shares Per Share Income Shares Per Share
Basic $ 32,485 25,080 $ 1.30 $ 20,098 24,050 $ 0.84

Effect of Dilutive Securities:
Stock Options — 1,085 — 253
Restricted Stock — 3 — —

Diluted $ 32,485 26,168 $ 1.24 $ 20,098 24,303 $ 0.83

~~- 18 -~~

~~ALTISOURCE PORTFOLIO SOLUTIONS S.A.~~
~~Notes to Condensed Consolidated Financial Statements~~
~~(continued)~~


	For Three Months Ended
	March 31,
(in thousands, except per share amounts)	2011		2010

Net Income	$	14,825	$	6,307


Weighted-Average Common Shares Outstanding, Basic		24,845		24,690
Dilutive Effect of Stock Options		1,083		970
Dilutive Effect of Restricted Shares		—		3

Weighted-Average Common Shares Outstanding, Diluted		25,928		25,663


Earnings Per Share
Basic	$	0.60	$	0.26

Diluted	$	0.57	$	0.25

~~A total~~For the three months ended March 31, 2011, an immaterial amount of ~~0.2 million~~ options that were anti-dilutive have been excluded from the computation of diluted EPS (0.7 million for the three ~~and nine~~ months ended ~~September 30, 2010.~~March 31, 2010). These options were anti-dilutive because their exercise price was greater than the average market price of our stock. Also excluded from the computation of diluted EPS ~~in both~~for each of the three months ended March 31, 2011 and 2010 ~~periods~~ are 0.7 million options, granted for shares that are issuable upon the achievement of certain market and performance criteria related to our stock price and an annualized rate of return to investors that have not been met at this point.

NOTE 1513 — COMMITMENTS AND CONTINGENCIES

Correspondent One S.A.

Correspondent One is formed to facilitate the purchase of conforming and government guaranteed residential mortgages from approved mortgage originators. During the first quarter of 2011, we provided initial funding to facilitate the establishment of the entity. We have committed to provide an additional $14.0 million which expect to fund in the second quarter.

Litigation

The Company is from time to time involved in legal actions arising in the ordinary course of business. In the opinion of management, after consultation with legal counsel, the outcome of any such current matters will not have a material impact on the Company’s financial condition, results of operations or cash flows.

NOTE 14 — SEGMENT REPORTING

Our business segments ~~reflect~~are based upon our organizational structure which focuses primarily on the services offered and are consistent with the internal reporting that we use to evaluate operating performance and to assess the allocation of our resources by our Chief Executive Officer.

~~Our segments are based upon our organizational structure which focuses primarily on the services offered.~~

We classify our businesses into three reportable segments.Mortgage Servicesconsists of mortgage portfolio management services that span the mortgage lifecycle.Financial Servicesprincipally consists of unsecured asset recovery and customer relationship management.Technology ~~Products~~Services consists of modular, comprehensive integrated technological solutions for loan servicing, vendor management and invoice presentment and payment as well as providing infrastructure support. In addition, ourCorporate Items and Eliminationssegment ~~prior to the Separation Date~~ includes eliminations of transactions between the reporting segments ~~as well as expenditures recognized by us related to the Separation. Subsequent to the Separation Date, in addition to the previously mentioned items,~~and this segment also includes costs recognized by us related to corporate support functions such as finance, legal, human resources, six sigma and ~~consumer behavior.~~quality assurances.

~~- 19 -~~

ALTISOURCE PORTFOLIO SOLUTIONS S.A.
~~Notes~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(continued)

In 2011, we reorganized our reporting structure in that certain services that were originally part of the Mortgage Services Segment are now classified as part of Financial Services. Prior periods have been recast to ~~Condensed Consolidated Financial Statements~~
~~(continued)~~conform with the current year presentation.

Financial information for our segments is as follows:


														Three Months Ended March 31, 2011
	Three Months Ended September 30, 2010																					Corporate
									Corporate Items and			Consolidated		Mortgage		Financial			Technology			Items &			Consolidated
(in thousands)	Mortgage Services		Financial Services			Technology Products			Eliminations⁽¹⁾			Altisource		Services		Services			Services			Eliminations			Altisource

Revenue	$	53,933	$	14,529		$	12,963		$	(3,845	)	$	77,580	$	59,707	$	19,493		$	12,716		$	(3,246	)	$	88,670
Cost of Revenue		33,119		12,134			7,239			(3,845	)		48,647		37,020		13,488			7,445			(3,004	)		54,949

Gross Profit		20,814		2,395			5,724			—			28,933		22,687		6,005			5,271			(242	)		33,721
Selling, General and Administrative Expenses		4,187		4,404			1,610			4,795			14,996
Selling, General and Administrative															4,583		4,460			1,196			6,015			16,254

Income (Loss) from Operations		16,627		(2,009	)		4,114			(4,795	)		13,937		18,104		1,545			4,075			(6,257	)		17,467
Other Income (Expense), net		687		(9	)		(24	)		44			698		365		(11	)		(15	)		5			344

Income (Loss) Before Income Taxes	$	17,314	$	(2,018	)	$	4,090		$	(4,751	)	$	14,635	$	18,469	$	1,534		$	4,060		$	(6,252	)	$	17,811


Transactions with Related Parties Included Above:
Transactions with Related Parties:
Revenue	$	34,765	$	34		$	4,660		$	—		$	39,459	$	43,810	$	29		$	4,951		$	—		$	48,790

Selling, General and Administrative Expenses	$	—	$	—		$	—		$	223		$	223	$	—	$	—		$	—		$	391		$	391

~~ALTISOURCE PORTFOLIO SOLUTIONS S.A.~~
~~Notes to Condensed Consolidated Financial Statements~~
~~(continued)~~

Three Months Ended September 30, 2009
Corporate Items and Consolidated
(in thousands) Mortgage Services Financial Services Technology Products Eliminations⁽¹⁾ Altisource
Revenue $ 29,141 $ 15,837 $ 12,451 $ (3,365 ) $ 54,064
Cost of Revenue 17,262 12,635 5,582 (2,026 ) 33,453

Gross Profit 11,879 3,202 6,869 (1,339 ) 20,611
Selling, General and Administrative Expenses 1,238 6,802 1,084 1,941 11,065

Income (Loss) from Operations 10,641 (3,600 ) 5,785 (3,280 ) 9,546
Other Income (Expense), net 52 2,469 (51 ) 76 2,546

Income (Loss) Before Income Taxes $ 10,693 $ (1,131 ) $ 5,734 $ (3,204 ) $ 12,092

Transactions with Related Parties Included Above:
Revenue $ 20,963 $ 28 $ 5,044 $ — $ 26,035

Selling, General and Administrative Expenses $ 531 $ 85 $ 294 $ (388 ) $ 522

Interest Expense $ 7 $ 147 $ 39 $ — $ 193

Nine Months Ended September 30, 2009
Corporate Items and Consolidated
(in thousands) Mortgage Services Financial Services Technology Products Eliminations⁽¹⁾ Altisource
Revenue $ 70,861 $ 49,624 $ 35,133 $ (9,132 ) $ 146,486
Cost of Revenue 41,042 40,514 18,042 (7,793 ) 91,805

Gross Profit 29,819 9,110 17,091 (1,339 ) 54,681
Selling, General and Administrative Expenses 4,913 14,632 3,880 3,791 27,216

Income (Loss) from Operations 24,906 (5,522 ) 13,211 (5,130 ) 27,465
Other Income (Expense), net 29 1,354 (304 ) 76 1,155

Income (Loss) Before Income Taxes $ 24,935 $ (4,168 ) $ 12,907 $ (5,054 ) $ 28,620

Transactions with Related Parties Included Above:
Revenue $ 51,355 $ 66 $ 15,801 $ — $ 67,222

Selling, General and Administrative Expenses $ 2,712 $ 467 $ 1,517 $ (388 ) $ 4,308

Interest Expense $ 30 $ 1,029 $ 231 $ — $ 1,290


⁽¹⁾		Intercompany transactions primarily consist of information technology infrastructure services and charges for the use of certain REAL products from our Technology Products segment to our other two segments. Generally, we reflect these charges within technology and communication in the segment receiving the services, except for consulting services, which we reflect in professional services.

~~- 21 -~~

Item 2. 2

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Management’s discussion and analysis of results of operations and financial condition (“MD&A”) is a supplement to the accompanying consolidated financial statements and provides additional information on our businesses, current developments, financial condition, cash flows and results of operations. Significant sections of the MD&A are as follows:

Overview.This section, beginning on page 18, provides a description of recent developments we believe are important in understanding the results of operations and financial condition or in understanding anticipated future trends.

Consolidated Results of Operations. This section, beginning on page 19, provides an analysis of our consolidated results of operations for the three months ended March 31, 2011 and 2010. In addition, a brief description is provided of significant transactions and events that affect the comparability of results being analyzed.

Segment Results of Operations. This section, beginning on page 23, provides an analysis of each business segment for the three months ended March 31, 2011 and 2010 as well as our Corporate segment. In addition, we discuss significant transactions, events and trends that may affect the comparability of the results being analyzed.

Liquidity and Capital Resources. This section, beginning on page 31, provides an analysis of our cash flows for three months ended March 31, 2011 and 2010. We also discuss restrictions on cash movements, future commitments and capital resources.

FORWARD-LOOKING STATEMENTS

This Quarterly Report contains forward-looking statements that relate to, among other things, our future financial and operating results. In many cases, you can identify forward-looking statements by terminology such as “may,” “will,” “should,” “expect,” “intend,” “plan,” “anticipate,” “believe,” “estimate,” “predict,” “potential” or “continue” or the negative of these terms and other comparable terminology including, but not limited to, the following:

assumptions related to the sources of liquidity and the adequacy of financial resources;

assumptions about our ability to grow our business;

assumptions about our ability to reduce our cost structure;

expectations regarding collection rates and placements in our Financial Services segment;

estimates regarding the calculation of our effective tax rate; and

estimates regarding our reserves and valuations.

Forward-looking statements are not guarantees of future performance and involve a number of assumptions, risks and uncertainties that could cause actual results to differ materially. Important factors that could cause actual results to differ materially from those suggested by the forward-looking statements include, but are not limited to, the risks discussed in “Risk Factors” in our Form 10-K for the year ended December 31, 2010 and include the following:

our ability to retain and expand our existing client relationships and attract new customers; and

governmental regulations, taxes and policies.

We caution you not to place undue reliance on these forward-looking statements which reflect our view only as of the date of this report. We are under no obligation (and expressly disclaim any obligation) to update or alter any forward-looking statements contained herein to reflect any change in our expectations with regard thereto or change in events, conditions or circumstances on which any such statement is based.

ALTISOURCE PORTFOLIO SOLUTIONS S.A.
Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) is intended to help the reader understand the results of operations and financial condition of Altisource. MD&A is provided as a supplement to, and should be read in conjunction with, our Condensed Consolidated Financial Statements and the accompanying notes and with our Annual Report on Form 10-K as filed with the Securities and Exchange Commission on March 17, 2010.

~~This MD&A contains forward-looking statements; please see Section 7 of this Item 2 for more information. Significant components of the MD&A section include:~~


		~~Page~~
~~SECTION 1 — Overview~~		24
The overview section provides a summary of Altisource and our reportable business segments. We also include a discussion of factors affecting our consolidated results of operations as well as items specific to each business group. In addition, we provide a brief description of our basis of presentation for our financial results.

~~SECTION 2 — Consolidated Results of Operations~~		25
The consolidated results of operations section provides an analysis of our results on a consolidated basis for the three and nine months ending September 30, 2010 and 2009. When helpful in explaining trends, we also discuss sequential results. Significant subsections within this section are as follows:

~~Summary Consolidated Results~~		25
~~Revenue~~		26
~~Cost of Revenue~~		27
~~Selling, General and Administrative Expenses~~		28
~~EBITDA~~		28
~~Income Taxes~~		29

~~SECTION 3 — Segment Results of Operations~~		29
The segment results of operations section provides an analysis of our results on a reportable operating segment basis for the three and nine months ending September 30, 2010 and 2009. We discuss known trends and uncertainties. When helpful in explaining trends, we also discuss sequential results. Significant subsections within this section are as follows:

~~Mortgage Services~~		34
~~Financial Services~~		37
~~Technology Products~~		40

~~SECTION 4 — Liquidity and Capital Resources~~		42
The liquidity and capital resources section provides discussion of our ability to generate adequate amounts of cash to meet our current and future needs. Significant subsections within this section are as follows:

~~Liquidity~~		42
~~Cash Flows~~		42
~~Liquidity Requirements after September 30, 2010~~		43
~~Capital Resources~~		43
~~Commitments and Contingencies~~		43

~~SECTION 5 — Critical Accounting Policies~~		43

~~SECTION 6 — Other Matters~~		43
~~The other matters section provides a discussion of related party transactions and provisions of the various separation related agreements with Ocwen.~~

~~SECTION 7 — Forward Looking Statements~~		44
~~EX-31.1~~
~~EX-31.2~~
~~EX-32.1~~

~~- 23 -~~

~~Management’s Discussion and Analysis of~~
~~Financial Condition and Results of Operations~~
(continued)

~~SECTION 1 —~~ OVERVIEW

~~Altisource is~~Our Business

We are a provider of services focused on high value, technology-enabled, knowledge-based functions principally related to real estate and mortgage portfolio management, asset recovery and customer relationship management. Utilizing integrated technology that includes decision models and behavioral based scripting engines, we provide solutions that improve clients’ performance and maximize their returns.

~~Our objective is to become a global knowledge process provider initially focused on the entire mortgage services lifecycle and credit to cash lifecycle management spaces.~~ We classify our businesses into three reportable segments:

Mortgage Services:Consists of portfolio management services that span the mortgage lifecycle. In 2011, we reorganized our reporting structure in that certain services originally part of Component Services and Other in this segment are now classified as part of Customer Relationship Management in our Financial Services segment. Following this change, Component Services has been renamed Origination Management Services. Origination Management Services includes MPA, our legacy contract underwriting business and our origination fulfillment operations currently under development. Prior periods have been recast to conform to the current year presentation.

Financial Services:Consists of unsecured asset recovery and customer relationship management. As discussed above, Customer Relationship Management now includes certain services that were originally recorded as part of Mortgage Services.

Technology Services:Consists of modular, comprehensive integrated technological solutions for loan servicing, vendor management and invoice presentment and payment as well as providing infrastructure support.

Stock Repurchase Plan

We intend to ~~achieve this objective~~limit dilution caused by ~~executing~~option exercises, including anticipated exercises, and acquisitions by repurchasing shares on the open market. On May 19, 2010, our ~~strategies~~shareholders authorized us to purchase 15% of ~~penetrating existing customers, acquiring new customers, increasing quality and reducing costs and investing~~our outstanding share capital, or 3.8 million shares of our common stock, in ~~new service offerings.~~the open market. Since the start of the stock repurchase program, we have purchased 0.9 million shares of our common stock on the open market at an average price of $27.85, leaving 2.9 million shares available for purchase under the program.

~~A. Separation~~Springhouse, LLC

On August 10, 2009, Altisource became a stand-alone public company in connection with our Separation from Ocwen. In connection with the Separation, Altisource and Ocwen entered into Agreements that address the allocation of assets and liabilities between them and that define their relationship after the Separation. Additional information may be found in Note 1 to the condensed consolidated financial statements.

~~B. Basis of Presentation~~

The accompanying condensed consolidated financial statements present the historical results of operations, assets and liabilities attributable to the Altisource businesses. For periods prior to the Separation Date, these condensed consolidated financial statements include allocations of expenses from Ocwen for certain corporate functions. Total corporate costs allocated to the Company were $4.3 million for the nine months ended September 30, 2009 ($0.5 million in 2009 for the third quarter). The charges for these functions are included primarily in Selling, General and Administrative Expenses in the Condensed Consolidated Statements of Operations. In addition, Ocwen had allocated interest expense to us based upon our portion of assets to Ocwen’s total assets which is reflected as Interest Expense in the Condensed Consolidated Statements of Operations. Other than transition services, there have been no allocations of Ocwen expenses charged to us since the Separation Date.

~~In February 2010,~~April 11, 2011, we acquired ~~all~~Springhouse, LLC (“Springhouse”) an appraisal management company that utilizes a nationwide panel of appraisers to provide real estate appraisals principally to mortgage originators, including the ~~outstanding membership interests~~members of ~~MPA. MPA was formed with the purpose of managing BPMC which operates as Lenders One.~~ Lenders One, ~~is a national alliance of independent mortgage bankers that provides its Members with education~~ and training along with revenue enhancing, cost reducing and market share expanding opportunities. The results of operations of BPMC are consolidated under the variable interest model since the acquisition date.real estate asset managers.

For periods prior to the Separation, the condensed consolidated financial statements also do not necessarily reflect what the Company’s consolidated results of operations, financial position and cash flows would have been had the Company operated as an independent company during the entirety of the periods presented. For instance, as an independent public company, Altisource incurs costs in excess of those previously allocated by Ocwen for maintaining a separate Board of Directors, obtaining a separate audit, relocating certain executive management and hiring additional personnel.

Factors Affecting Comparability

~~In addition to the~~The following items ~~noted within the~~~~Basis of Presentation~~~~section presented above, the following additional item~~ may impact the comparability of our results:

~~During~~In February 2010, ~~to further align~~we acquired all of the outstanding membership interests of ~~management~~MPA which was formed with ~~shareholders,~~the purpose of managing Lenders One (see Note 1 to the condensed consolidated financial statements). The results of operations of Lenders One have been consolidated under the variable interest model since the acquisition date;

Effective January 1, 2011, we ~~expanded~~modified our ~~use~~pricing for IT Infrastructure Services within our Technology Services segment from a rate card model primarily based on headcount to a fully loaded cost plus mark-up methodology. This new model applies to the infrastructure amounts charged to Ocwen as well as internal allocations of ~~equity compensation. For the nine months ended September 30, 2010, we have recognized $2.1 million ($1.2 million~~infrastructure costs. The impact of this change is discussed further in the third quarter) of equity compensation expense as compared to $0.3 million for the full year ending December 31, 2009. As a result of the share price doubling as compared to the grant price during June 2010, performance criteria were met for certain option grants which triggered vesting of the award and acceleration in the expense recognition of these grants. This contributed to the increase in equity compensation expense in the third quarter of 2010;Technology Services segment.

	•		~~During the nine months ended September 30, 2009, we recognized $3.4 million ($1.5 million during the third quarter) of one-time costs in anticipation of the Separation from Ocwen; and~~

	•		During the nine months ended September 30, 2009, we recognized $2.3 million in facility closure costs in Selling, General and Administrative Expenses and a $2.3 million litigation settlement gain in Other Income (both of which were recorded in the third quarter) in our Financial Services segment.

~~- 24 -~~

ALTISOURCE PORTFOLIO SOLUTIONS S.A.
Management’s Discussion and Analysis of
Financial Condition and Results of Operations
(continued)

~~SECTION 2 —~~ CONSOLIDATED RESULTS OF OPERATIONS

Summary Consolidated Results

Following is a discussion of our consolidated results of operations for the periods indicated. In evaluating performance, we neutralize the impact of pass-through items for which we earn no margin by excluding reimbursable expenses and non-controlling interests where appropriate and calculating all margins based upon Service Revenue.

The following table sets forth information regarding our results of operations for the periods ended ~~September 30, 2010~~March 31, 2011 and ~~2009:~~2010:


	Three Months Ended September 30,												Nine Months Ended September 30,												Three Months Ended March 31,
(in thousands, except per share amounts)	2010			2009			$ Change			% Change			2010			2009			$ Change			% Change
																															%
(in thousands)																									2011			2010			Better/(worse)

Service Revenue	$	62,159		$	48,384			13,775			28		$	172,725		$	137,477			35,248			26		$	71,730		$	51,657			39
Reimbursable Expenses		13,369			5,680			7,689			135			33,040			9,009			24,031			N/M			15,641			8,530			83
Cooperative Non-controlling Interest		2,052			—			2,052			N/M			4,136			—			4,136			N/M			1,299			787			(65	)

Total Revenue		77,580			54,064			23,516			44			209,901			146,486			63,415			43			88,670			60,974			45

Cost of Revenue		35,278			27,773			7,505			27			98,709			82,796			15,913			19			54,949			39,354			(40	)
Reimbursable Expenses		13,369			5,680			7,689			135			33,040			9,009			24,031			N/M


Gross Profit		28,933			20,611			8,322			40			78,152			54,681			23,471			43			33,721			21,620			56

Gross Profit / Service Revenue																										47	%		41	%

Selling, General and Administrative Expenses		14,996			11,065			3,931			36			40,168			27,216			12,952			48			16,254			12,069			(35	)

Income from Operations																										17,467			9,551			83
Income from Operations / Service Revenue																										24	%		18	%

Income from Operations		13,937			9,546			4,391			46			37,984			27,465			10,519			38

Other Income (Expense), net		698			2,546			(1,848	)		(73	)		666			1,155			(489	)		(42	)

Other Expense, net																										344			(72	)		N/M

Income Before Income Taxes and Non-controlling Interests		14,635			12,092			2,543			21			38,650			28,620			10,030			35			17,811			9,479			88
Income Tax Benefit (Provision)		(2,751	)		(3,448	)		697			20			(2,029	)		(8,522	)		6,493			76

Income Tax Provision																										(1,687	)		(2,385	)		29

Net Income		11,884			8,644			3,240			37			36,621			20,098			16,523			82			16,124			7,094			127

Net Income Attributable to Non-controlling Interests		(2,052	)		—			(2,052	)		N/M			(4,136	)		—			(4,136	)		N/M			(1,299	)		(787	)		(65	)


Net Income Attributable to Altisource	$	9,832		$	8,644			1,188			14		$	32,485		$	20,098			12,387			62		$	14,825		$	6,307			135


Earnings Per Share
Basic	$	0.39		$	0.36								$	1.30		$	0.84								$	0.60		$	0.26

Diluted	$	0.37		$	0.36								$	1.24		$	0.83								$	0.57		$	0.25


Transactions with Related Parties:
Revenue	$	39,459		$	26,035			13,424			52		$	104,494		$	67,222			37,272			55		$	48,790		$	29,251			67

Selling, General and Administrative Expenses	$	223		$	522			(299	)		(57	)	$	811		$	4,308			(3,497	)		(81	)		391			324			(21	)

Interest Expense	$	—		$	193			(193	)		(100	)	$	—		$	1,290			(1,290	)		(100	)

ALTISOURCE PORTFOLIO SOLUTIONS S.A.
Management’s Discussion and Analysis of
Financial Condition and Results of Operations
(continued)

Revenue

The following table presents our revenues for the periods ended ~~September 30, 2010~~March 31, 2011 and ~~2009:~~2010:


																									Three Months Ended March 31,
	Three Months Ended September 30,												Nine Months Ended September 30,																		%
(in thousands)	2010			2009			$ Change			% Change			2010			2009			$ Change			% Change			2011			2010			Better/(worse)

Mortgage Services:
Service Revenue:	$	39,319		$	23,461			15,858			68		$	102,856		$	61,852			41,004			66		$	43,340		$	23,714			83
Reimbursable Expenses		12,562			5,680			6,882			121			30,811			9,009			21,802			242			15,068			7,882			91
Cooperative Non-controlling Interest		2,052			—			2,052			N/M			4,136			—			4,136			N/M			1,299			787			65

Mortgage Services — Total Revenue		53,933			29,141			24,792			85			137,803			70,861			66,942			95			59,707			32,383			84

Financial Services:
Financial Services
Service Revenue:		13,722			15,837			(2,115	)		(13	)		43,413			49,624			(6,211	)		(13	)		18,920			19,397			(2	)
Reimbursable Expenses		807			—			807			N/M			2,229			—			2,229			N/M			573			648			(12	)

Financial Services — Total Revenue		14,529			15,837			(1,308	)		(8	)		45,642			49,624			(3,982	)		(8	)		19,493			20,045			(3	)

Technology Products		12,963			12,451			512			4			37,422			35,133			2,289			7

Technology Services																										12,716			11,974			6

Eliminations		(3,845	)		(3,365	)		(480	)		(14	)		(10,966	)		(9,132	)		(1,834	)		(20	)		(3,246	)		(3,428	)		(5	)

															��
Total Revenue	$	77,580		$	54,064			23,516			44		$	209,901		$	146,486			63,415			43
Total Revenues																									$	88,670		$	60,974			45


Transactions with Related Parties:

Mortgage Services	$	34,765		$	20,963			13,802			66		$	90,749		$	51,355			39,394			77		$	43,810		$	24,762			77


Financial Services	$	34		$	28			6			22		$	110		$	66			44			67			29			51			(43	)


Technology Products	$	4,660		$	5,044			(384	)		(8	)	$	13,635		$	15,801			(2,166	)		(14	)

Technology Services																										4,951			4,438			12

~~Management’s Discussion and Analysis of~~
~~Financial Condition and Results of Operations~~
~~(continued)~~

lower telephony expenses.

Selling, General and Administrative Expenses

Selling, ~~general~~General and ~~administrative expenses~~Administrative Expenses include payroll, employee benefits, occupancy and other costs associated with personnel employed in executive, sales, marketing, human resources ~~consumer behavior, internal audit~~ and finance roles. This category also includes professional fees, depreciation and amortization on non-operating assets. The components of Selling, General and Administrative Expenses were as follows for the periods ended ~~September 30, 2010~~March 31, 2011 and ~~2009:~~2010:


																									Three Months Ended March 31,
	Three Months Ended September 30,												Nine Months Ended September 30,																		%
(in thousands)	2010			2009			$ Change			% Change			2010			2009			$ Change			% Change			2011			2010			Better/(worse)

Compensation and Benefits	$	5,251		$	521			4,730			N/M		$	13,256		$	4,307			8,949			208		$	5,920		$	4,040			(47	)
Professional Services		1,812			4,158			(2,346	)		(56	)		5,869			7,514			(1,645	)		(22	)		2,102			2,296			8
Occupancy Related Costs		4,733			1,976			2,757			140			10,845			6,086			4,759			78			3,333			2,353			(42	)
Amortization of Intangible Assets		1,450			668			782			117			4,089			2,004			2,085			104			1,273			1,189			(7	)
Other		1,750			3,742			(1,992	)		(53	)		6,109			7,305			(1,196	)		(16	)		3,626			2,191			(65	)


Total Selling, General and Administrative Expenses	$	14,996		$	11,065			3,931			36		$	40,168		$	27,216			12,952			48		$	16,254		$	12,069			(35	)


Operating Percentage:
Operating Margin Percentage
Income from Operations/Service Revenue																										24	%		18	%

Operating Income / Total Revenue		18	%		18	%								18	%		19	%


Operating Income / Service Revenue		22	%		20	%								22	%		20	%

ALTISOURCE PORTFOLIO SOLUTIONS S.A.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
(continued)


~~N/M~~		~~— not meaningful.~~

~~Similar~~Our operating margin percentage increased to ~~gross margins, we evaluate operating margins by comparing Operating Income over Service Revenue to neutralize the impact of pass-through items for which we earn no margin.~~

~~When calculated based on Service Revenue, our operating margins~~24% for the three ~~and nine~~ months ended ~~September 30, 2010 improved slightly when compared to the similar prior year period.~~

~~Compensation and Benefits has increased from the prior year~~March 31, 2011 primarily as a result of the ~~cost~~composition of our revenues being more weighted towards our higher margin Mortgage Services segment. Sequentially, operating margins were relatively flat as declines in Mortgage Services attributable to revenue declines previously discussed were offset by improvements at Financial Services, which included a ~~separate public company~~goodwill impairment charge in the fourth quarter of 2010.

Compensation and Benefits increased compared to the ~~need to have separate~~prior year primarily as we built out our support functions such as accounting, legal and human resources ~~as well as~~throughout 2010.

Professional Services were relatively flat compared to the previously mentioned reclassification of certain executive and marketing related compensation costs from cost of revenues. In addition, equity compensation for senior executives is recognized within Selling, General and Administrative Expenses.

~~Costs associated with Professional Services have increased over the~~ prior year after we consider the impact of 2009 one-time costs of $3.4 million year to date ($1.5 million for the third quarter) related to the Separation and $2.3 million year to date (all recorded in the third quarter) related to facility closure costs in our Financial Services segment. The increase in Professional Services is primarily attributable to costs associated with being a separate public company including increased audit and legal fees as well as insurance.year.

Occupancy Related Costs increased as compared to 2010 due to the growth in ~~2010 primarily as a result of~~ our ~~expansion of services~~business which ~~led to new leased facilities in India and the United States. The year to date increase was partially offset by decreases associated with lease facility closures in Financial Services~~resulted in the ~~third quarter~~addition of ~~2009.~~approximately 1,000 people worldwide.

Amortization of Intangible Assets increased slightly as a result of the intangibles acquired in connection with the acquisition of MPA ~~(see Notes 3~~in February 2010.

Income Before Income Tax

The following table presents income before income tax including amount attributable to Altisource by segment:


	Three Months Ended
	March 31,
(in thousands)	2011			2010

Mortgage Services:
Income Before Income Taxes	$	18,469		$	8,650
Non-controlling Interests		(1,299	)		(787	)

Income Before Income Taxes Attributable to Altisource	$	17,170		$	7,863
As percent of Service Revenue		40	%		33	%

Financial Services:
Income Before Income Taxes	$	1,534		$	1,403
As percent of Service Revenue		8	%		7	%

Technology Services:
Income Before Income Taxes	$	4,060		$	4,209
As percent of Revenue		32	%		35	%

Consolidated:
Income Before Income Taxes	$	17,811		$	9,479
Non-controlling Interests		(1,299	)		(787	)

Income Before Income Taxes Attributable to Altisource	$	16,512		$	8,692
As percent of Service Revenue		23	%		17	%

On a consolidated basis, income before income tax attributable to Altisource grew principally as a result of the national rollout of mortgage services and 7the growth of Ocwen’s servicing portfolio during 2010 as previously discussed. Sequentially, income before income taxes attributable to Altisource grew $2.2 million; however, the fourth quarter included a $2.8 million charge for goodwill impairment in the Financial Services segment. Adjusting for the impairment charge, income before income taxes attributable to Altisource as a percent of Service Revenue remained constant at 23% for both quarters.

For the Mortgage Services segment, income before income taxes attributable to Altisource declined sequentially by $0.8 million attributable to the ~~condensed consolidated financial statements).~~decline in Service Revenue as previously discussed. Income before income taxes attributable to Altisource as a percent of Service Revenue improved to 40% from 39% sequentially primarily as a result of the mix of services and a reduction in intersegment technology charges.

~~EBITDA~~

~~Altisource evaluates performance based on several factors of which a primary financial measure is~~For the Financial Services segment, income before ~~interest, tax, depreciation~~income taxes improved $4.7 million sequentially primarily due to the $2.8 million goodwill impairment recognized in the fourth quarter and ~~amortization (“EBITDA”). We believe that~~the benefit of a seasonally strong first quarter. In addition, the Financial Services segment also started to see the initial benefits of disciplined floor management and improved performance for our customers. Technology costs for the Financial Services segment increased sequentially; however, this ~~non-GAAP financial measure~~ is ~~useful~~expected to ~~investors and analysts~~improve in the second half of 2011 as we implement certain cost containment measures.

~~- 28 -~~

ALTISOURCE PORTFOLIO SOLUTIONS S.A.
Management’s Discussion and Analysis of
Financial Condition and Results of Operations
(continued)

in analyzing and assessing our overall business performance since we utilize this information for making operating decisions, for compensation decisions and for forecasting and planning future periods. WhileFor the ~~Company uses non-GAAP financial measures~~Technology Services segment, income before income taxes declined $1.2 million sequentially, principally as a ~~tool to enhance its understanding~~result of ~~certain aspects of its financial performance and to provide incremental insight into~~ the ~~underlying factors and trends affecting both the Company’s performance and its cash-generating potential, the Company does not consider these measures to be a substitute~~reduced pricing for or superior to, the information provided by GAAP financial measures. Consistent with this approach, the Company believes that disclosing non-GAAP financial measures to the readers of its financial statements provides such readers with useful supplemental data that, while not a substitute for GAAP financial measures, allows for greater transparency in the review of its financial and operational performance and enables investors to more fully understand trends in its current and future performance.IT infrastructure services as previously discussed.

Three Months Ended September 30, Nine Months Ended September 30,
(in thousands) 2010 2009 $ Change % Change 2010 2009 $ Change % Change
Income Before Income Taxes $ 14,635 $ 12,092 2,543 21 $ 38,650 $ 28,620 10,030 35
Interest, net 26 191 (165 ) (86 ) 65 1,601 (1,536 ) (96 )
Depreciation and Amortization 1,804 1,395 409 29 5,015 4,188 827 20
Amortization of Intangibles 1,450 668 782 117 4,089 2,004 2,085 104
Net Income Attributable to Non-controlling Interests (2,052 ) — (2,052 ) N/M (4,136 ) — (4,136 ) N/M

EBITDA⁽¹⁾
$ 15,863 $ 14,346 1,517 11 $ 43,683 $ 36,413 7,270 20

EBITDA Margin:
EBITDA / Total Revenue 20 % 27 % 21 % 25 %

EBITDA / Service Revenue 26 % 30 % 25 % 26 %


⁽¹⁾		~~See “~~~~SECTION 3 — SEGMENT RESULTS OF OPERATIONS~~~~” below for a reconciliation of the most directly comparable GAAP measure to EBITDA.~~

~~N/M — not meaningful.~~

~~We evaluate EBITDA margins against Service Revenue internally to neutralize the impact of pass-through items for which we earn no margin.~~

~~EBITDA margins based on Service Revenue declined year to date~~Corporate costs increased $0.6 million principally due to ~~a decline in performance of Financial Services~~increased costs associated with compliance and ~~scaling our operations~~quality assurance, including related hiring costs, to support ~~the national rollout~~our growing business.

Income Tax Provision

The Company recognized an income tax provision of services and the anticipated growth in Ocwen’s residential loan portfolio. In addition, during 2010, to further align the interests of management with shareholders, we expanded our use of equity compensation. For the nine months ended September 30, 2010, we have recognized $2.2 million ($1.2 million in the third quarter) of equity compensation expense as compared to $0.3$1.7 million for the ~~full year ending December~~three months ended March 31, 2009. We expect EBITDA as a percent of service revenue to improve in the fourth quarter as we begin to more fully realize the benefit of Ocwen’s acquisition of the residential loan portfolio of HomEq and leverage our larger operational structure.

~~Income Taxes~~

~~For the third quarter Altisource’s~~2011 representing an effective tax rate ~~was 18.8%, which is higher than our estimated effective tax rate for the full year due to permanent differences recognized in the quarter.~~of 9%. The ~~year to date effective tax rate is 5.2% which includes the impact of credits recognized in the second quarter associated with 2009. Income tax provision on income before~~ income tax ~~differs from amounts that would be~~provision computed by applying the Luxembourg ~~federal corporate income~~statutory tax rate of ~~28.6%~~28.9% differs from the effective tax rate primarily because of the effect of ~~enacted~~the favorable tax ~~statutes~~ruling as well as the mix of income and losses in multiple ~~jurisdictions, the treatment of intangibles for tax purposes and differing tax rates outside of Luxembourg.~~

taxing jurisdictions.

~~SECTION 3 —~~ SEGMENT RESULTS OF OPERATIONS

The following section provides a discussion of pre-tax results of operations of our business segments for the ~~periods~~three months ended ~~September 30, 2010~~March 31, 2011 and ~~2009.~~2010. Transactions between segments are accounted for as third-party arrangements for purposes of presenting ~~segment results~~Segment Results of ~~operations.~~Operations. Intercompany transactions primarily consist of information technology infrastructure services and charges for the use of certain REAL products from our Technology ~~Products~~Services segment to our other two segments. Generally, we reflect these charges within technology and communication in the segment receiving the services, except for consulting services, which we reflect in professional services.

~~- 29 -~~

~~Management’s Discussion and Analysis of~~
~~Financial Condition and Results of Operations~~
~~(continued)~~

Financial information for our segments is as follows:


																Three Months Ended March 31, 2011
	Three Months Ended September 30, 2010																							Corporate
	Mortgage			Financial			Technology			Corporate Items and			Consolidated			Mortgage		Financial			Technology			Items &			Consolidated
(in thousands)	Services			Services			Products			Eliminations⁽¹⁾			Altisource			Services		Services			Services			Eliminations			Altisource

Revenue	$	53,933		$	14,529		$	12,963		$	(3,845	)	$	77,580		$	59,707	$	19,493		$	12,716		$	(3,246	)	$	88,670
Cost of Revenue		33,119			12,134			7,239			(3,845	)		48,647			37,020		13,488			7,445			(3,004	)		54,949

Gross Profit		20,814			2,395			5,724			—			28,933			22,687		6,005			5,271			(242	)		33,721
Selling, General and Administrative Expenses		4,187			4,404			1,610			4,795			14,996
Selling, General and Administrative																	4,583		4,460			1,196			6,015			16,254

Income (Loss) from Operations		16,627			(2,009	)		4,114			(4,795	)		13,937			18,104		1,545			4,075			(6,257	)		17,467
Other Income (Expense), net		687			(9	)		(24	)		44			698			365		(11	)		(15	)		5			344

Income (Loss) Before Income Taxes and Non-Controlling Interests	$	17,314		$	(2,018	)	$	4,090		$	(4,751	)	$	14,635


Reconciliation to EBITDA
Income (Loss) Before Income Taxes and Non-Controlling Interests	$	17,314		$	(2,018	)	$	4,090		$	(4,751	)	$	14,635
Interest, net		(3	)		13			23			(7	)		26
Depreciation and Amortization⁽²⁾		74			478			1,140			112			1,804
Amortization of Intangibles		781			669			—			—			1,450
Net Income Attributable to Non-controlling Interests		(2,052	)		—			—			—			(2,052	)

EBITDA	$	16,114		$	(858	)	$	5,253		$	(4,646	)	$	15,863
Income (Loss) Before Income Taxes																$	18,469	$	1,534		$	4,060		$	(6,252	)	$	17,811


Transactions with Related Parties:
Revenue	$	34,765		$	34		$	4,660		$	—		$	39,459		$	43,810	$	29		$	4,951		$	—		$	48,790

Selling, General and Administrative Expenses	$	—		$	—		$	—		$	223		$	223		$	—	$	—		$	—		$	391		$	391

~~Management’s Discussion and Analysis of~~
~~Financial Condition and Results of Operations~~
~~(continued)~~

Nine Months Ended September 30, 2009
Corporate
Mortgage Financial Technology Items and Consolidated
(in thousands) Services Services Products Eliminations⁽¹⁾ Altisource
Revenue $ 70,861 $ 49,624 $ 35,133 $ (9,132 ) $ 146,486
Cost of Revenue 41,042 40,514 18,042 (7,793 ) 91,805

Gross Profit 29,819 9,110 17,091 (1,339 ) 54,681
Selling, General and Administrative Expenses 4,913 14,632 3,880 3,791 27,216

Income (Loss) from Operations 24,906 (5,522 ) 13,211 (5,130 ) 27,465
Other Income (Expense), net 29 1,354 (304 ) 76 1,155

Income (Loss) Before Income Taxes and Non-controlling Interests $ 24,935 $ (4,168 ) $ 12,907 $ (5,054 ) $ 28,620

Reconciliation to EBITDA
Income (Loss) Before Income Taxes and Non-controlling Interests $ 24,935 $ (4,168 ) $ 12,907 $ (5,054 ) $ 28,620
Interest, net 28 1,286 302 (15 ) 1,601
Depreciation and Amortization⁽²⁾
22 1,898 2,259 9 4,188
Amortization of Intangibles — 2,004 — — 2,004

EBITDA $ 24,985 $ 1,020 $ 15,468 $ (5,060 ) $ 36,413

Transactions with Related Parties:
Revenue $ 51,355 $ 66 $ 15,801 $ — $ 67,222

Selling, General and Administrative Expenses $ 2,712 $ 467 $ 1,517 $ (388 ) $ 4,308

Interest Expense $ 30 $ 1,029 $ 231 $ — $ 1,290


⁽¹⁾		Intercompany transactions primarily consist of information technology infrastructure services and charges for the use of certain REAL products from our Technology Products segment to our other two segments. Generally, we reflect these charges within technology and communication in the segment receiving the services, except for consulting services which we reflect in professional services.

⁽²⁾		Includes depreciation and amortization of $1.0 million and $1.6 million for the nine months ended September 30, 2010 and 2009 ($0.5 million for the quarter ended September 30, 2009), for assets reflected in the Technology Products segment but utilized by the Financial Services segment.

~~- 33 -~~

~~Management’s Discussion and Analysis of~~
~~Financial Condition and Results of Operations~~
~~(continued)~~

Mortgage Services

The following table presents our results of operations for our Mortgage Services segment for the three ~~and nine~~ months ending ~~September 30:~~March 31:


																			Three Months Ended March 31,
	Three Months Ended September 30,									Nine Months Ended September 30,															%
(in thousands)	2010		2009		$ Change			% Change		2010		2009		$ Change			% Change		2011			2010			Better/(worse)

Service Revenue	$	39,319	$	23,461		15,858			68	$	102,856	$	61,852		41,004			66	$	43,340		$	23,714			83
Reimbursable Expenses		12,562		5,680		6,882			121		30,811		9,009		21,802			242		15,068			7,882			91
Cooperative Non-controlling Interest		2,052		—		2,052			N/M		4,136		—		4,136			N/M		1,299			787			65


Total Revenue		53,933		29,141		24,792			85		137,803		70,861		66,942			95		59,707			32,383			84

Cost of Revenue		33,119		17,262		15,857			92		84,622		41,042		43,580			106		37,020			21,293			(74	)

Gross Profit																				22,687			11,090			105
		20,814		11,879		8,935			75		53,181		29,819		23,362			78
Gross Profit
Gross Profit/Service Revenue																				52	%		47	%

Selling, General and Administrative Expenses		4,187		1,238		2,949			238		10,683		4,913		5,770			117		4,583			2,443			(88	)


Income from Operations	$	16,627	$	10,641		5,986			56	$	42,498	$	24,906		17,592			71	$	18,104		$	8,647			109


EBITDA⁽¹⁾	$	16,114	$	10,719		5,395			50	$	41,280	$	24,985		16,295			65
Income from Operations/Service Revenue																				42	%		36	%


Transactions with Related Parties Above:
Transactions with Related Parties Included Above:
Revenue	$	34,765	$	20,963		13,802			66	$	90,749	$	51,355		39,394			77	$	43,810		$	24,762			77

Selling, General and Administrative Expenses		—		531		(531	)		N/M		—		2,712		(2,712	)		N/M

Interest Expense	$	—	$	7		(7	)		N/M	$	—	$	30		(30	)		N/M

~~Management’s Discussion~~ arrangements and ~~Analysis~~the members own network of
~~Financial Condition and Results of Operations~~
~~(continued)~~

~~arrangements resulting~~ loan buyers. We anticipate this will result in improved capital markets ~~execution. We expect this will~~execution for the members and facilitate the sale of our services to the members.

Sequentially, Mortgage Services revenues declined principally due to two factors. First, fourth quarter revenues were positively impacted due to the boarding of loans by Ocwen in September. This triggered an elevated level of valuation reports utilized by Ocwen to determine the appropriate course of action for the loans and an elevated level of foreclosure title searches and initiated foreclosure actions. Although the boarding of these loans did ultimately lead to an increase in referrals for various Mortgage Services businesses, we recognize revenue for these referrals over an extended period of time or when the homes sell. Given the seasonal nature of home sales, we would expect Asset Management Services revenues to significantly increase in the second and third quarters. Second, MPA ~~and its consolidated subsidiary contributed $11.4 million of revenue, including $4.1 million attributable to non-controlling interests, and $3.9 million of EBITDA since~~was impacted by the ~~February 2010 acquisition date. This revenue and EBITDA was a sequential improvement and was substantially in line with our internal projections which included a forecasted~~overall market decline in loan origination ~~volumes during 2010.~~activity experienced in the first quarter. Partially offsetting these declines was growth in our insured title business following the receipt of title agent licenses in California and the continued development of our title agent services in other states. We expect ~~this decline~~ to ~~be somewhat mitigated given~~continue to ramp up the ~~accelerated pace~~title insurance agency business through the balance of ~~new members joining~~ the ~~cooperative. Through September 30, 2010, MPA has over 170 Members.~~year.

Although we believe the development of origination services is important to balancing our service offerings, it will require a significant investment in personnel, technology and management to ensure we can perform these services in-line with customer expectations. When appropriate, we will consider small complementary acquisitions similar in nature to the recent acquisition of Springhouse to facilitate the growth of origination services. Although we will continue to leverage our global delivery model and our experience with technological based solutions, econometrics and behavioral science, these investments could limit our ability to significantly expand Mortgage Services margins calculated based upon Service Revenue during 2011.

ALTISOURCE PORTFOLIO SOLUTIONS S.A.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
(continued)

Revenue

Three Months Ended September 30, Nine Months Ended September 30,
(in thousands) 2010 2009 $ Change % Change 2010 2009 $ Change % Change
Revenue:

Asset Management Services $ 22,349 $ 10,570 11,779 111 $ 54,198 $ 19,417 34,781 179
Component Services and Other 11,264 5,198 6,066 117 28,057 13,601 14,456 106
Residential Property Valuation 8,796 6,233 2,563 41 22,952 20,268 2,684 13
Closing and Title Services 6,461 4,334 2,127 49 17,878 12,924 4,954 38
Default Management Services 5,063 2,806 2,257 80 14,718 4,651 10,067 216
Total Revenue $ 53,933 $ 29,141 24,792 85 $ 137,803 $ 70,861 66,942 95

Transactions with Related Parties:

Asset Management Services 21,250 10,570 10,680 101 53,099 19,417 33,682 174
Residential Property Valuation 8,729 6,000 2,729 46 22,182 19,613 2,569 13
Closing and Title Services 3,428 3,235 193 6 10,818 10,370 448 4
Default Management Services 1,358 1,158 200 17 4,650 1,955 2,695 138

Total $ 34,765 $ 20,963 13,802 66 $ 90,749 $ 51,355 39,394 77

Reimbursable Expenses:

Asset Management Services 11,899 5,191 6,708 129 29,027 8,337 20,690 248
Default Management Services 561 489 72 15 1,609 672 937 139
Closing and Title Services 102 — 102 N/M 175 — 175 N/M
Total $ 12,562 $ 5,680 6,882 121 $ 30,811 $ 9,009 21,802 242


	Three Months Ended March 31,
					%
(in thousands)	2011		2010		Better/(worse)

Service Revenue:
Asset Management Services	$	12,306	$	5,967		106
Origination Management Services		3,958		2,490		59
Residential Property Valuation		9,884		6,580		50
Closing and Title Services		9,381		5,253		79
Default Management Services		7,483		3,424		119
Others		328		—		N/M

Total Service Revenue		43,340		23,714		83

Reimbursable Expenses:
Asset Management Services		13,881		7,369		88
Default Management Services		1,187		513		131

Total Reimbursable Expenses		15,068		7,882		91

Non-controlling Interests:		1,299		787		65

Total Revenue	$	59,707	$	32,383		84


Transactions with Related Parties:
Asset Management Services	$	26,226	$	13,380		96
Residential Property Valuation		9,657		6,015		61
Closing and Title Services		4,751		3,828		24
Default Management Services		3,176		1,539		106

Total	$	43,810	$	24,762		77

N/M — not ~~meaningful~~meaningful.

In our Mortgage Services segment, we generate the majority of our revenue by providing outsourced services that span the lifecycle of a mortgage loan primarily for Ocwen or with respect to the ~~residential~~ loan portfolio serviced by Ocwen. In addition to our relationship with Ocwen, we have longstanding relationships with some of the leading capital markets firms, commercial banks, hedge funds, insurance companies, credit unions and lending institutions. We provide products that enhance their ability to make informed investment decisions and manage their core operations. With the acquisition of MPA in February 2010 and our strategic marketing agreement with Members United, we took a significant step in our evolution to become a full service provider in the mortgage services vertical and gained increased access to a growing group of mid-tier mortgage bankers and credit unions.

~~Asset Management Services.~~Asset management services principally include property preservation, property inspection, REO asset management and REO brokerage. In the first quarter of 2010, we completed our national network for property preservation services and, including our real estate broker referral network, have national coverage for REO dispositions. The increase in revenue has mostly been driven by our property preservation services to date; however, the increase in REO brokerage referrals should ultimately drive additional revenues as we dispose of these properties on behalf of our clients.

Asset Management Services.Asset Management Services principally include property preservation, property inspection, REO asset management and REO brokerage. In the first quarter of 2010, we completed our national network for property preservation services and, including our real estate broker referral network, have coverage nationally for REO dispositions. The completion of the national network and increases in Ocwen’s loan portfolio are the reasons for the significant growth compared to the prior year period. Sequentially, Service Revenue for this segment increased as a result of the growth in Ocwen’s loan portfolio and an increase in REO properties disposed when compared to the prior period.

~~Component~~
Origination Management Services ~~and Other~~. Origination Management Services includes MPA and our developing fulfillment business. The increase ~~in component services~~ year over year is principally due to ~~an expanded relationship with an existing customer beginning in the second quarter of 2009 and~~ the inclusion of MPA’s results for an entire quarter in 2011 as compared to a partial period in 2010 from the date of acquisition. Sequentially, revenue declined as a result of the general decline in the loan origination market which impacted MPA’s results. For the quarter, MPA added six members.

Residential Property Valuation. ~~As one of the more mature services in our portfolio, residential property valuations are subject to market conditions. During the third~~The first quarter of 2011 was higher than first quarter 2010 ~~we saw a sequential increase in revenues~~ as a result of Ocwen’s residential loan portfolio ~~growth, including~~growth. As previously discussed, sequentially we saw a decline in revenues due to the ~~HomEq portfolio, resulting~~elevated fourth quarter 2010 impact of loans boarded by Ocwen in ~~the ordering of more valuations, particularly broker price opinions. We expect to see this increased level of referrals to continue during the fourth quarter.~~September 2010.

~~- 35 -~~

~~Management’s Discussion and Analysis of~~
~~Financial Condition and Results of Operations~~
~~(continued)~~

Closing and Title Services.This business includes legacy services such as pre-foreclosure title services as well as an expanded array of title services that were rolled out during 2010 and 2009 principally around REO purchase transactions. During ~~2010,~~2011, we are focused on rolling out insured title services nationwide, similar to what we accomplished with our REO closing business in 2010 which explains increase year over year. Sequentially, revenues slightly declined as the growth in insured title agency ~~business in key markets which we believe will drive significant revenue growth in 2011 at attractive margins. We expect~~products was insufficient to ~~obtain agency status in California~~offset the elevated title search revenues in the fourth ~~quarter.~~quarter caused by the boarding of loans by Ocwen in September 2010. We expect closing and title services to significantly grow throughout the year as we expand our insured title agency offerings.

ALTISOURCE PORTFOLIO SOLUTIONS S.A.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
(continued)

Default Management Services.This group includes support services whereby we provide non-legal back-office support for foreclosure, bankruptcy and eviction attorneys as well as ~~non-judicial~~ foreclosure ~~services in California and Nevada through~~trustee services. The first quarter of 2011 was higher than the first quarter of 2010 as a result of our trustee company Western Progressive, LLC. We do not execute or notarize any foreclosure affidavits. During the third quarter, we experienced a slight sequential decline in revenue. This decline since the second quarter was principally caused by the timing of referrals which were more heavily weighted towards the end of September (resulting in less revenue being recognized in the quarter) and the elongation of the time it takes to process foreclosures which resulted in us extending the period over which we recognize revenue for some states.

~~Cost of Revenue~~

Three Months Ended September 30, Nine Months Ended September 30,
(in thousands) 2010 2009 $ Change % Change 2010 2009 $ Change % Change
Expenditures $ 20,557 11,582 8,975 77 53,811 32,033 21,778 68
Reimbursable Expenses 12,562 5,680 6,882 121 30,811 9,009 21,802 242

Cost of Revenue $ 33,119 $ 17,262 15,857 92 $ 84,622 $ 41,042 43,580 106

Gross Margin Percentage:

Cost of Revenue / Total Revenue 39 % 41 % 39 % 42 %

Cost of Revenue less Reimbursable Expenses / Service Revenue 48 % 51 % 48 % 48 %

~~Primarily during the second and third quarter, we began scaling our operations to support the national~~continued rollout of services and in anticipation of the growth in Ocwen’s residential loan portfolio. These costs have principally included increased compensation and benefit and technology costs. Due to the number of persons we were hiringa national platform as well as ~~training time, it was necessary~~Ocwen’s servicing portfolio growth. Sequentially, we saw a decrease in revenues during the first quarter primarily due to hire these resources several months prior to the completion of Ocwen’s acquisition of the HomEq residential loan portfolio. We expect to begin utilizing these expanded operations to generate additional revenueelevated foreclosure referrals in the fourth quarter ~~and throughout 2011.~~

~~Selling, General and Administrative Expenses~~

Three Months Ended September 30, Nine Months Ended September 30,
(in thousands) 2010 2009 $ Change % Change 2010 2009 $ Change % Change
Total Selling, General and Administrative Expenses $ 4,187 $ 1,238 2,949 238 $ 10,683 $ 4,913 5,770 117

Operating Percentage:
Operating Income / Total Revenue 31 % 37 % 31 % 35 %

Operating Income / Service Revenue 42 % 45 % 41 % 40 %

~~Selling, General and Administrative Expenses increased principally as a result~~following Ocwen’s boarding of ~~the classification of certain compensation and benefit costs related to segment management and marketing previously being captured either~~additional loans in Cost of Revenue or as a component of the Corporate segment now being captured in Selling, General and Administrative Expenses. In addition, professional services fees such as those associated with the external audit have increased as a result of being a public company. Such costs are allocated to the segments based upon expected hours to be incurred per segment by the vendor.September.

Our operating margins for the nine months ended September 30, 2010 based on Service Revenue remained relatively flat as the significant additional facility costs as a result of scaling our operations were substantially offset by revenue growth.

~~- 36 -~~

~~Management’s Discussion and Analysis of~~
~~Financial Condition and Results of Operations~~
~~(continued)~~

~~EBITDA~~

Three Months Ended September 30, Nine Months Ended September 30,
(in thousands) 2010 2009 $ Change % Change 2010 2009 $ Change % Change
EBITDA $ 16,114 $ 10,719 5,395 50 $ 41,280 $ 24,985 16,295 65

EBITDA Margin:
EBITDA / Total Revenue 30 % 37 % 30 % 35 %

EBITDA / Service Revenue 41 % 46 % 40 % 40 %

Mortgage Services EBITDA growth in both periods was predominantly driven by the expansion of our national footprint and the increase in Ocwen’s residential loan portfolio in November 2009 and May 2010. Mortgage Services EBITDA margins calculated based upon Service Revenue remained consistent with the second quarter.

~~Financial Services~~

~~The following table presents our results of operations for our Financial Services segment for the three and nine months ending September 30:~~

Three Months Ended September 30, Nine Months Ended September 30,
(in thousands) 2010 2009 $ Change % Change 2010 2009 $ Change % Change
Service Revenue $ 13,722 15,837 (2,115 ) (13 ) $ 43,413 49,624 (6,211 ) (13 )
Reimbursable Expenses 807 — 807 — 2,229 — 2,229 —

Total Revenue 14,529 15,837 (1,308 ) (8 ) 45,642 49,624 (3,982 ) (8 )

Cost of Revenue 12,134 12,635 (501 ) (4 ) 37,538 40,514 (2,976 ) (7 )

Gross Profit 2,395 3,202 (807 ) (25 ) 8,104 9,110 (1,006 ) (11 )

Selling, General and Administrative Expenses 4,404 6,802 (2,398 ) (35 ) 11,997 14,632 (2,635 ) (18 )

Loss from Operations (2,009 ) (3,600 ) 1,591 44 (3,893 ) (5,522 ) 1,629 30

EBITDA⁽¹⁾
$ (858 ) $ 292 (1,150 ) N/M $ (404 ) $ 1,020 (1,424 ) (140 )

Transactions with Related Parties Above:
Revenue $ 34 $ 28 6 21 $ 110 $ 66 44 67

Selling, General and Administrative Expenses $ — $ 85 (85 ) N/M $ — $ 467 (467 ) N/M

Interest Expense $ — $ 147 (147 ) N/M $ — $ 1,029 (1,029 ) N/M


⁽¹⁾		~~See above for a reconciliation of the most directly comparable GAAP measure to EBITDA.~~

~~N/M — not meaningful.~~

Financial Services revenue declined both for the quarter and year to date when compared to the prior year. Sequentially, revenues declined $1.0 million due to decreased placements from our largest customer. We were able to partially offset this decline by increased placements from a customer we began servicing in 2009 as well as growth in revenue from other customers.

Our strategy for 2010 continues to be focused on improving margins principally via improving revenue per collector, expanding our quality initiatives and investing in new technology. In addition, in the fourth quarter of 2010, we named a new President for the segment.

~~- 37 -~~

Cost of Revenue

Three Months Ended March 31,
%
(in thousands) 2011 2010 Better/(worse)

Expenditures $ 21,952 $ 13,411 (64 )
Reimbursable Expenses 15,068 7,882 (91 )

Cost of Revenue $ 37,020 $ 21,293 (74 )

Gross Margin Percentage:
Gross Profit/Service Revenue 52 % 47 %

Our gross margin was 52% for the first quarter of 2011. Several factors impact our gross margins from period to period including seasonality, the mix of services delivered, timing of investments in new services and the timing of when loans are boarded by our customers.

Selling, General and Administrative Expenses

Three Months Ended March 31,
%
(in thousands) 2011 2010 Better/(worse)

Total Selling, General and Administrative Expenses $ 4,583 $ 2,443 (88 )

Operating Percentage:
Income from Operations/Service Revenue 42 % 36 %

Selling, General and Administrative Expenses increased year over year principally due to the exponential growth in the segment which required investments in facilities, technology and other general and administrative costs. As this segment continues to grow, we should see continued leverage resulting in increased margin.

ALTISOURCE PORTFOLIO SOLUTIONS S.A.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
(continued)

Financial Services

The following table presents our results of operations for our Financial Services segment for the three months ending March 31:

Three Months Ended March 31,
%
(in thousands) 2011 2010 Better/(worse)

Service Revenue $ 18,920 $ 19,397 (2 )
Reimbursable Expenses 573 648 (12 )

Total Revenue 19,493 20,045 (3 )

Cost of Revenue 13,488 14,526 7

Gross Profit 6,005 5,519 9

Gross Profit/Service Revenue 32 % 28 %

Selling, General and Administrative Expenses 4,460 4,100 (9 )

Income / (Loss) from Operations $ 1,545 $ 1,419 9

Income from Operations/Service Revenue 8 % 7 %

Transactions with Related Parties:
Revenue $ 29 $ 51 (43 )

As discussed above, Customer Relationship Management now includes certain services that were originally recorded as part of Mortgage Services.

Financial Services revenue declined compared to the prior year due to a decline in revenue from the segment’s largest customer. The decline was in part as a result of the client shifting work to the Company’s global delivery platform which resulted in lower revenue although higher margins. This decline was partially offset by growth in new asset recovery management accounts and growth in customer relationship management revenues. Sequentially, revenue grew $0.8 million, or 5%, primarily due to the seasonality of collections.

Our new leadership team is focused on disciplined floor management and cost containment as well as improving the analytics to determine which accounts to contact, what offer to make and what to say. In addition, we are focused on delivering more services over our global delivery platform, expanding our quality initiatives and investing in new technology. We expect limited revenue growth in this segment and instead will be focused on the performance of our collectors, which should facilitate future year growth as well as margin improvement.

Revenue

Three Months Ended March 31,
%
(in thousands) 2011 2010 Better/(worse)

Service Revenue:
Asset Recovery Management $ 10,904 $ 12,172 (10 )
Customer Relationship Management 8,016 7,225 11

Total Service Revenue 18,920 19,397 2

Reimbursable Expenses:
Asset Recovery Management 573 648 (12 )

Total Reimbursable Expenses 573 648 (12 )

Total Revenue 19,493 20,045 3

Transactions with Related Parties:
Asset Recovery Management $ 29 $ 51 (43 )

ALTISOURCE PORTFOLIO SOLUTIONS S.A.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
~~Financial Condition and Results of Operations~~
(continued)

~~Revenue~~

Three Months Ended September 30, Nine Months Ended September 30,
(in thousands) 2010 2009 $ Change % Change 2010 2009 $ Change % Change
Revenue:

Asset Recovery Management $ 11,542 $ 12,180 (638 ) (5 ) $ 36,937 $ 39,419 (2,482 ) (6 )
Customer Relationship Management 2,987 3,657 (670 ) (18 ) 8,705 10,205 (1,500 ) (15 )

Total Revenue $ 14,529 $ 15,837 (1,308 ) (8 ) $ 45,642 $ 49,624 (3,982 ) (8 )

Transactions with Related Parties:

Asset Recovery Management $ 34 $ 28 6 21 $ 110 $ 66 44 67

In our Financial Services segment, we generate the majority of our revenue from asset recovery management fees we earn for collecting amounts due to our customers and from fees we earn for performing customer relationship management for our customers.

Asset Recovery Management.Our revenues associated with contingency collections declined ~~in both periods principally~~when compared to the first quarter of 2010 due to a decline in revenues from our largest customer. The decline was in part a result of the client shifting work to the Company’s global delivery platform which resulted in lower revenue although generally at higher margins and as a result of collector performance. In general, we have seen improved performance of our collectors which we believe will translate into better placements ~~and a shift~~ in ~~placements to operations that provide lower per collector revenue, but higher margin.~~the future should such performance continue.

Customer Relationship Management. Our revenues ~~associated~~ with customer relationship management ~~declined~~increased year over both periods as we sought to wind down our relationship with one customer due to unsatisfactory margins as well as due to the seasonal nature of the business. In the third quarter, we expanded our relationship with another customer.

~~Cost of Revenue~~

Three Months Ended September 30, Nine Months Ended September 30,
(in thousands) 2010 2009 $ Change % Change 2010 2009 $ Change % Change
Expenditures $ 11,327 $ 12,635 (1,308 ) (104 ) $ 35,309 $ 40,514 (5,205 ) (13 )
Reimbursable Expenses 807 — 807 N/M 2,229 — 2,229 N/M

Cost of Revenue $ 12,134 $ 12,635 (501 ) (4 ) $ 37,538 $ 40,514 (2,976 ) (7 )

Gross Margin Percentage:

Cost of Revenue / Total Revenue 16 % 20 % 18 % 18 %

Cost of Revenue less Reimbursable Expenses / Service Revenue 17 % 20 % 19 % 18 %

~~N/M — not meaningful.~~

~~Our Cost of Revenues, net of reimbursable expenses, decreased principally due to a reduction in compensation and benefits~~year as a result of ~~a lower number of collectors and reduced commissions. In addition, we continue~~increased services to ~~seek ways~~two key customers. We expect revenues to ~~reduce technology and communication costs for this segment.~~

~~- 38 -~~

~~Management’s Discussion and Analysis of~~
~~Financial Condition and Results of Operations~~
~~(continued)~~

~~Selling, General and Administrative Expenses~~

Three Months Ended September 30, Nine Months Ended September 30,
(in thousands) 2010 2009 $ Change % Change 2010 2009 $ Change % Change
Total Selling, General and Administrative Expenses $ 4,404 $ 6,802 (2,398 ) (35 ) $ 11,997 $ 14,632 (2,635 ) (18 )

Operating Percentage:

Operating Income / Total Revenue (14) % (23) % (9) % (11) %

Operating Income / Service Revenue (15) % (23) % (9) % (11) %

During the nine months ended September 30, 2009, we recognized $2.3 million (all recorded in the third quarter) in facility closure costs. Excluding these costs, Selling, General and Administrative Expenses in both 2010 periods were consistent with the comparative 2009 periods.

~~EBITDA~~

Three Months Ended September 30, Nine Months Ended September 30,
(in thousands) 2010 2009 $ Change % Change 2010 2009 $ Change % Change
EBITDA $ (858 ) $ 292 (1,150 ) N/M $ (404 ) $ 1,020 (1,424 ) (140 )

EBITDA Margin:
EBITDA / Total Revenue (6) % 2 % (1) % 2 %

~~Financial Services EBITDA declined $1.2 million year over year despite a revenue decline of $4.0 million which reflects the cost savings initiatives we undertook~~be flat or decrease in the second ~~half of 2009 and the wind-down of business from a lower margin~~quarter due to customer ~~relationship management client in 2010. Sequentially EBITDA declined~~requirements offset in part ~~due to the seasonality of the business as well as the previously mentioned decline in placements. The facility closure costs discussed above were offset~~ by ~~a litigation settlement of $2.3 million awarded to us during the third quarter of 2009.~~seasonality.

~~- 39 -~~

~~Management’s Discussion and Analysis of~~
~~Financial Condition and Results of Operations~~
~~(continued)~~

Cost of Revenue

Three Months Ended March 31,
%
(in thousands) 2011 2010 Better/(worse)
Expenditures $ 12,915 13,878 7

Reimbursable Expenses 573 648 12

Cost of Revenue $ 13,488 $ 14,526 7

Gross Margin Percentage:
Gross Profit/Service Revenue 32 % 28 %

Our gross margin was 32% for the first quarter of 2011. The primary component of Cost of Revenue is compensation and benefits for our collectors. Personnel costs declined when compared to the prior year as a result of expanding our global delivery footprint while rationalizing higher cost locations. This was partially offset by higher technology costs.

Selling, General and Administrative Expenses

Three Months Ended March 31,
%
(in thousands) 2011 2010 Better/(worse)

Total Selling, General and Administrative Expenses $ 4,460 $ 4,100 (9 )

Operating Percentage:
Income / (Loss) from Operations/Service Revenue 8 % 7 %

Selling, General and Administrative Expenses increased, compared to the prior year, primarily as a result of additional costs incurred to support increased placements and the expansion of our Goa facility.

ALTISOURCE PORTFOLIO SOLUTIONS S.A.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
(continued)

Technology Services

The following table presents our results of operations for our Technology Services segment for the three months ending March 31:

Three Months Ended March 31,
%
(in thousands) 2011 2010 Better/(worse)

Revenue $ 12,716 $ 11,974 6
Cost of Revenue 7,445 6,647 (12 )

Gross Profit 5,271 5,327 (1 )

Gross Profit/Service Revenue 41 % 44 %

Selling, General and Administrative Expenses 1,196 1,106 (8 )

Income from Operations $ 4,075 $ 4,221 (3 )

Income from Operations/Service Revenue 32 % 35 %

Transactions with Related Parties:
Revenue $ 4,951 $ 4,438 12

The primary focus of the Technology Services segment is to support the growth of Mortgage Services and Ocwen. In addition, Technology Services is assisting in the cost reduction and quality initiatives on-going within the Financial Services segment. In 2011, we intend to expend significant resources, principally personnel costs and external consulting costs to accomplish three key objectives:

The re-architecture and enhancement of our REALSuite of services;

The deployment of business process management and business intelligence reporting systems to more effectively manage our operations; and

The development and early stage incubation of technology solutions principally based on patented technologies.

Effective January 1, 2011, we modified our pricing for IT Infrastructure Services within our Technology Services segment from a rate card model based principally on headcount to a fully loaded costs plus mark-up methodology. This new model applies to the infrastructure amounts charged to Ocwen as well as internal allocations of infrastructure costs.

Revenue

Three Months Ended March 31,
%
(in thousands) 2011 2010 Better/(worse)

Service Revenue:
REAL Suite $ 8,156 $ 6,986 17
IT Infrastructure Services 4,560 4,988 (9 )

Total Revenue $ 12,716 $ 11,974 6

Transactions with Related Parties:
REALSuite $ 1,946 $ 2,555 (24 )
IT Infrastructure Services 3,005 1,883 60

Revenue $ 4,951 $ 4,438 12

~~Technology Products~~

~~The following table presents our results of operations for our Technology Products segment for the three and nine months ending September 30:~~

Three Months Ended September 30, Nine Months Ended September 30,
(in thousands) 2010 2009 $ Change % Change 2010 2009 $ Change % Change
Revenue $ 12,963 $ 12,451 512 4 $ 37,422 $ 35,133 2,289 7
Cost of Revenue 7,239 5,582 1,657 30 20,555 18,042 2,513 14

Gross Profit 5,724 6,869 (1,145 ) (17 ) 16,867 17,091 (224 ) (1 )

Selling, General and Administrative Expenses 1,610 1,084 526 49 4,040 3,880 160 4

Income from Operations $ 4,114 $ 5,785 (1,671 ) (29 ) $ 12,827 $ 13,211 (384 ) (3 )

EBITDA⁽¹⁾
$ 5,253 $ 6,545 (1,292 ) (20 ) $ 15,869 $ 15,468 401 3

Transactions with Related Parties Above:
Revenue $ 4,660 $ 5,044 (384 ) (8 ) $ 13,635 $ 15,801 (2,166 ) (14 )

Selling, General and Administrative Expenses $ — $ 294 (294 ) N/M $ — $ 1,517 (1,517 ) N/M

Interest Expense $ — $ 39 (39 ) N/M $ — $ 231 (231 ) N/M

⁽¹⁾

		~~See “above for a reconciliation of the most directly comparable GAAP measure to EBITDA.~~

~~N/M~~		~~— not meaningful.~~

The primary focus of the Technology Products segment continues to be supporting the growth of Mortgage Services and Ocwen as well as the cost reduction and quality initiatives on-going within the Financial Services segment. During the first quarter, we re-organized the management team of Technology Products by naming a new President for the segment. We are focused on enhancing our development and infrastructure capabilities to support both our expansion efforts and those of Ocwen. In addition, we remain focused on the longer-term commercialization of our service offerings to expand their applicability to a broader audience.

~~Revenue~~

Three Months Ended September 30, Nine Months Ended September 30,
(in thousands) 2010 2009 $ Change % Change 2010 2009 $ Change % Change
Revenue:

REALSuite $ 7,864 $ 6,822 1,042 15 $ 22,415 $ 18,478 3,937 21
IT Infrastructure Services 5,099 5,629 (530 ) (9 ) 15,007 16,655 (1,648 ) (10 )

Total Revenue $ 12,963 $ 12,451 512 4 $ 37,422 $ 35,133 2,289 7

Transactions with Related Parties:

REALSuite $ 2,744 $ 2,445 299 12 $ 7,952 $ 7,281 671 9
IT Infrastructure Services 1,916 2,599 (683 ) (26 ) 5,683 8,520 (2,837 ) (33 )

Total $ 4,660 $ 5,044 (384 ) (8 ) $ 13,635 $ 15,801 (2,166 ) (14 )

Beginning with the second quarter of 2009, we began generating the majority of our revenue within this segment from our REALSuite of services, and we expect this trend to continue for the foreseeable future.

REALSuite. Our REALSuite revenue is primarily driven by our REALServicing^® product which is our comprehensive residential loan servicing platform. ~~Increases~~The primary driver for the growth in ~~both year-to-date and quarterly revenues were driven by increases in REALServicing~~

~~- 40 -~~

~~Management’s Discussion and Analysis of~~
~~Financial Condition and Results of Operations~~
~~(continued)~~

~~attributable to an expanded agreement with a non-related third party customer and~~revenue is the ~~growth~~increase in Ocwen’s residential loan portfolio.

ALTISOURCE PORTFOLIO SOLUTIONS S.A.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
(continued)

IT Infrastructure Services.Our IT infrastructure services revenues declined when compared to the comparable ~~periods~~period in ~~2009 primarily~~2010 almost entirely due to ~~lower intercompany billings (which we eliminate~~our change in ~~consolidation but include~~pricing for infrastructure services. The mark-ups are based upon economic studies performed consistent with our transfer pricing methodology. We expect revenues to be consistent or down in ~~our segment presentation) and reduced charges to Ocwen. Sequentially, Revenue increased slightly as Ocwen expanded their operations to support the acquisition of the HomEq residential loan portfolio.~~

~~Cost of Revenue~~

Three Months Ended September 30, Nine Months Ended September 30,
(in thousands) 2010 2009 $ Change % Change 2010 2009 $ Change % Change
Cost of Revenue $ 7,239 $ 5, 582 1,657 30 $ 20,555 $ 18,042 2,513 14

Gross Margin Percentage:

Cost of Revenue / Total Revenue 44 % 55 % 45 % 49 %

~~Cost of Revenue margins decreased both year to date and in the third quarter as a result of an increase in compensation and benefits~~future periods as we ~~added personnel to enhance our service capabilities, support our growth~~focus on reducing costs both internally and commercialize our products. In addition, in the third quarter, technology and communications costs increased both as a result of the addition of new facilities and the expansion of bandwidth at existing facilities to handle the increased demands expected in the fourth quarter.

~~Selling, General and Administrative Expenses~~

Three Months Ended September 30, Nine Months Ended September 30,
(in thousands) 2010 2009 $ Change % Change 2010 2009 $ Change % Change
Total Selling, General and Administrative Expenses $ 1,610 $ 1,084 526 49 $ 4,040 $ 3,880 160 4

Operating Percentage:

Operating Income / Total Revenue 32 % 46 % 34 % 38 %

Selling, General and Administrative Expenses increased both year to date and in the third quarter as a result of increased occupancy charges associated with the new data center. Sequentially, Selling, General and Administrative Expenses increased primarily as a result of costs incurred in preparing for ~~the HomEq transaction.~~Ocwen.

~~EBITDA~~

Three Months Ended September 30, Nine Months Ended September 30,
(in thousands) 2010 2009 $ Change % Change 2010 2009 $ Change % Change
EBITDA $ 5,253 $ 6,545 (1,292 ) (20 ) $ 15,869 $ 15,468 401 3

EBITDA Margin:
EBITDA / Total Revenue 41 % 53 % 42 % 44 %

Technology Products EBITDA increased year over year but declined quarter over quarter. Sequentially, margins decreased as higher revenues were more than offset by increased compensation and occupancy costs associated with the new data center as described above. The Company is increasing expenditures in technology software and hardware to support its commercialization efforts, Ocwen’s growing servicing portfolio and Altisource’s growth.

~~- 41 -~~

~~Management’s Discussion and Analysis of~~
~~Financial Condition and Results of Operations~~
~~(continued)~~

~~SECTION 4 — LIQUIDITY AND CAPITAL RESOURCES~~

Cost of Revenue

Three Months Ended March 31,
%
(in thousands) 2011 2010 Better/(worse)

Cost of Revenue $ 7,445 $ 6,647 (12 )

Gross Margin Percentage:
Cost of Revenue / Total Revenue 41 % 44 %

Our gross margin declined to 41% when compared to the first quarter of 2011 primarily as a result of compensation and benefits as we added personnel to enhance our service capabilities as well as the previously mentioned change in billing methodology.

Selling, General and Administrative Expenses

Three Months Ended March 31,
%
(in thousands) 2011 2010 Better/(worse)

Total Selling, General and Administrative Expenses $ 1,196 $ 1,106 (8 )

Operating Percentage:
Operating Income / Total Revenue 32 % 35 %

Selling, General and Administrative Expenses increased slightly primarily due to higher occupancy charges. Margins principally decreased as a result of the previously mentioned change in billing methodology.

Corporate

Our Corporate Segment includes costs recognized by us related to corporate support functions such as finance, legal, human resources, compliance and quality assurance.

Three Months Ended March 31,
%
(in thousands) 2011 2010 Better/(worse)

Total Selling, General and Administrative Expenses $ 6,015 $ 4,420 (36 )

Corporate costs rose throughout 2010 as we invested in staff to support our growing operations. In the first quarter, we hired additional resource principally focused on legal, compliance and quality assurance. In addition, we continue to invest in an enterprise resource planning system that we expect will increase the quality of our support functions and over time reduce costs.

ALTISOURCE PORTFOLIO SOLUTIONS S.A.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
(continued)

LIQUIDITY AND CAPITAL RESOURCES

Liquidity

We seek to deploy excess cash generated in a disciplined manner. Principally, we will continue to invest in compelling services that we believe will generate high margins. In addition, we may seek to acquire a limited number of complementary companies that fit our strategic objectives. Finally, given the tax inefficiency of dividends, the low returns earned on cash held and our current belief to pursue a limited number of acquisitions, we believe one of the best ways to return value to shareholders is a stock repurchase program.

On May 19, 2010, our shareholders authorized us to purchase up to 3.8 million shares of our common stock in the open market. Through March 31, 2011, we purchased 0.9 million shares of our common stock on the open market at an average price of $27.85, leaving 2.9 million shares still available for purchase.

~~Liquidity~~

We believe that we have the ability to generate more than sufficient cash from our current operations for the next twelve months to meet anticipated cash requirements. Anticipated cash requirements principally include operational expenditures such as compensation and benefits, working capital requirements and spending for capital expenditures.

We generate significant excess cash that we will seek to deploy in a disciplined manner. Principally, we will continue to invest in compelling services that we believe will generate high margins. In addition, we may seek to acquire a limited number of companies that fit our strategic objectives. Finally, given the tax inefficiency of dividends, the low returns earned on cash held and our desire to only perform a limited number of acquisitions, we believe one of the best ways to return value to shareholders is a share repurchase program. On May 19, 2010, our shareholders authorized us to purchase up to 3,784,618 shares of our common stock in the open market. During the third quarter of 2010, we purchased 86,098 shares of our common stock on the open market at an average price of $26.81, leaving 3,698,520 shares still available for purchase. Subsequently, during October, we purchased an additional 65,317 shares. As of October 25, 2010, we have repurchased a total of 151,415 shares at an average share price of $26.39.

Cash Flows

The following table presents our cash flows for the ~~nine~~three months ended ~~September 30:~~March 31:


	Nine Months Ended September 30,												Three Months Ended March 31,
(in thousands)	2010			2009			$ Change			% Change
Net Income Adjusted for Non-cash Items	$	46,819		$	24,876			21,943			88
																			%
(dollars in thousands)													2011			2010			Better/(worse)

Net Income Adjusted for Non-Cash Items													$	21,627		$	10,869			99
Working Capital		(13,558	)		1,510			(15,068	)		N/M			(5,028	)		8,816			(157	)

Cash Flow from Operating Activities		33,261			26,386			6,875			26			16,599			19,685			(16	)
Cash Flow from Investing Activities		(35,744	)		(3,787	)		(31,957	)		N/M			(2,645	)		(29,075	)		91
Cash Flow from Financing Activities		(4,936	)		(4,877	)		(59	)		(1	)		(9,764	)		(1,446	)		N/M

Net Change in Cash		(7,419	)		17,722			(25,141	)		(142	)		4,190			(10,836	)		139
Cash at Beginning of Period		30,456			6,988			23,468			N/M			22,134			30,456			(27	)

Cash at End of Period	$	23,037		$	24,710			(1,673	)		(7	)	$	26,324		$	19,620			34

ALTISOURCE PORTFOLIO SOLUTIONS S.A.
Management’s Discussion and Analysis of
Financial Condition and Results of Operations
(continued)

were received by us and transferred to centralized accounts maintained by Ocwen. There were no formal financing arrangements with Ocwen. Prior to the Separation we recorded all cash receipts and disbursement activity between Ocwen and us through invested equity in the Condensed Consolidated Balance Sheets and as net distributions in the Condensed Consolidated Statements of Equity and Cash Flows because we considered such amounts to have been distributed to Ocwen.

~~Liquidity Requirements after September 30, 2010~~

~~Between October 1 and October 25, 2010, we repurchased 65,317 shares at a total cost of $1.7 million.~~

~~During the fourth quarter 2010, we expect to distribute $2.1 million to non-controlling interests.~~

Management is not aware of any other trends or events, commitments or uncertainties which have not otherwise been disclosed that will or are likely to impact liquidity in a material way.

Capital Resources

Given our ability to generate cash flow ~~which is~~ sufficient to fund ~~both~~ current operations as well as expansion ~~activities,~~of our operations, we require very limited capital. Were we to need additional capital, we believe we have adequate access to both debt and equity capital markets.

Commitments and Contingencies

For details of these transactions, see Note 1613 to the condensed consolidated financial statements.

~~SECTION 5 —~~ CRITICAL ACCOUNTING POLICIES AND ESTIMATES

We prepare our condensed consolidated financial statements in accordance with accounting principles generally accepted in the United States. In applying many of these accounting principles, we need to make assumptions, estimates and/or judgments that affect the reported amounts of assets, liabilities, revenues and expenses in our condensed consolidated financial statements. We base our estimates and judgments on historical experience and other assumptions that we believe are reasonable under the circumstances. These assumptions, estimates and/or judgments, however, are often subjective. Actual results may be affected negatively based on changing circumstances. If actual amounts are ultimately different from our estimates, the revisions are included in our results of operations for the period in which the actual amounts become known.

Our critical accounting policies are described in the MD&A section in our ~~2009~~ Form ~~10-K.~~10-K for the year ended December 31, 2010. Such policies have not changed during ~~2010.~~

the first quarter of 2011.

~~SECTION 6 —~~ OTHER MATTERS

Related Party — Ocwen

For the ~~nine~~three months ended ~~September 30, 2010,~~March 31, 2011, approximately ~~$90.7~~$44 million of the Mortgage Services, ~~$0.1~~$0.03 million of the Financial Services and ~~$13.6~~$5.0 million of the Technology ~~Products~~Services segment revenues were from services provided to Ocwen or sales derived from Ocwen’s loan servicing portfolio. Services provided to Ocwen included residential property valuation, real estate asset management and sales, trustee management services, property inspection and preservation, closing and title services, charge-off second mortgage collections, core technology back office support and multiple business technologies including our REALSuite of products. We provided all services at rates we believe to be ~~comparable to~~ market rates.

In connection with the Separation, Altisource and Ocwen entered into various agreements that address the allocation of assets and liabilities between them and that define their relationship after the Separation including a Separation Agreement, a Tax Matters Agreement, an Employee Matters Agreement, an Intellectual Property Agreement, a Data Center and Disaster Recovery Agreement, a Technology Products Services Agreement, a Transition Services Agreement and certain long-term servicing contracts (collectively, the “Agreements”) (see Note 4 to our 2009 Form 10-K). For the ~~nine~~three months ended ~~September 30,~~March 31, 2010, Altisource billed Ocwen ~~$1.2~~$0.4 million, ~~($0.5 million for the third quarter),~~ and Ocwen billed Altisource ~~$0.8~~$0.3 million ~~($0.2 million for the third quarter)~~ for services provided under the Transition Services Agreement. These amounts are reflected as a component of Selling, General and Administrative ~~expenses~~Expenses in the accompanying ~~Condensed~~ Consolidated Statements of Operations.

~~- 43 -~~

~~Management’s Discussion and Analysis of~~
~~Financial Condition and Results of Operations~~
~~(continued)~~

~~SECTION 7 — FORWARD LOOKING STATEMENTS~~

	•		~~assumptions related to the sources of liquidity and the adequacy of financial resources;~~

	•		~~assumptions about our ability to grow our business;~~

	•		~~assumptions about our ability to reduce our cost structure;~~

	•		~~expectations regarding collection rates and placements in our Financial Services segment;~~

	•		~~estimates regarding the calculation of our effective tax rate; and~~

	•		~~estimates regarding our reserves and valuations.~~

Forward-looking statements are not guarantees of future performance and involve a number of assumptions, risks and uncertainties that could cause actual results to differ materially. Important factors that could cause actual results to differ materially from those suggested by the forward-looking statements include, but are not limited to, the risks discussed in “Risk Factors” in our Registration Statement on Form 10 and the following:

	•		~~our ability to retain existing customers and attract new customers;~~

	•		~~general economic and market conditions;~~

	•		~~governmental regulations, taxes and policies; and~~

	•		~~availability of adequate and timely sources of liquidity.~~

~~- 44 -~~32


Item 3.		~~Item 3.~~ Quantitative and Qualitative Disclosures about Market Risk.

Our financial market risk consists primarily of foreign currency exchange risk.

~~Foreign Currency Exchange Risk~~

We ~~consider the US Dollar~~are exposed to beforeign currency exchange rate risk in connection with our investment in non-U.S. dollar functional currency ~~worldwide and the majority of our servicing agreements~~operations, which are denominated in US Dollars. Where required locally, we incur certain costs, primarily lease and payroll costs, in local currencies which include the Euro and Indian Rupee. Costs incurred in local currencies expose us to foreign exchange rate fluctuationsvery limited, to the extent that our foreign exchange positions remain un-hedged.

~~Item 4. Controls and Procedures.~~
Item 4.
Controls and Procedures.

a)		Evaluation of Disclosure Controls and Procedures

		Our Chief Executive Officer and Chief Financial Officer have evaluated the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) or Rule 15a-15(e) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of the end of the period covered by this quarterly report. Based on such evaluation, such officers have concluded that our disclosure controls and procedures as of the end of the period covered by this quarterly report were effective to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC rules and forms, and to ensure that such information is accumulated and communicated to our management, including the Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

b)		Internal Control over Financial Reporting

		There were no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the quarter ending ~~September 30, 2010,~~March 31, 2011, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

~~- 45 -~~

PART II — OTHER INFORMATION


Item 1.		~~Item 1.~~ Legal Proceedings.

We are subject to routine litigation and administrative proceedings arising in the ordinary course of business.


Item 1A.		~~Item 1A.~~ Risk Factors.

As of the date of this filing, there have been no material changes in our risk factors from those disclosed in Part I, Item 1A, of our ~~2009~~ Form ~~10-K.~~10-K for the year ended December 31, 2010.


Item 2.		~~Item 2.~~ Unregistered Sales of Equity Securities and Use of Proceeds.

Equity Securities purchased by us

The following table presents information related to our repurchases of our equity securities during the three months ended ~~September 30, 2010:~~March 31, 2011:

Total number
of shares
purchased as Maximum number
Total Weighted part of publicly of shares that may
number of average announced plans yet be purchased
shares price paid or under the
Period purchased per share programs⁽¹⁾ plans or programs
Common shares^(1):

July 1 — 31, 2010 — $ — — 3,784,618
August 1 — 31, 2010 — — — 3,784,618
September 1 — 30, 2010 86,098 26.81 86,098 3,698,520

Total common shares 86,098 $ 26.81 86,098 3,698,520

Total number Maximum
of shares number
purchased as of shares that
part of may
publicly yet be
Total Weighted announced purchased
number of average plans under the
shares price paid or plans or
Period purchased per share programs⁽¹⁾ programs

Common shares^(1):

January 1 – 31, 2011 — $ — — 3,128,503
February 1 – 28, 2011 26,000 30.09 26,000 3,102,503
March 1 – 31, 2011 205,795 30.00 205,795 2,896,708

Total common shares 231,795 $ 30.01 231,795 2,896,708


⁽¹⁾		In the second quarter of 2010, our shareholders authorized us to purchase up to ~~3,784,618~~3.8 million shares of our common stock in the open market.


Item 3.		~~Item 3.~~ Defaults upon Senior Securities.None

~~Item 4. (Removed~~
Item 4.
(Removed and Reserved)


Item 5.		~~Item 5.~~ Other Information.None


Item 6.		~~Item 6.~~ Exhibits.


	31.1			Certification by the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith)

	31.2			Certification by the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith)

	32.1			Certification by the Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of theSarbanes-Oxley Act of 2002 (filed herewith)

~~- 46 -~~


	Page		~~Page~~

PART I — Financial Information

Item 1 Interim Condensed Consolidated Financial Statements

Condensed Consolidated Balance Sheets		3

Condensed Consolidated Statements of Operations		4

Condensed Consolidated Statement of Equity		5

Condensed Consolidated Statements of Cash Flows		6

Notes to Condensed Consolidated Financial Statements

Note 1 — Organization and Basis of Presentation		7

Note 2 — Transactions with Related Parties		98

Note 3 ~~— Acquisition of MPA~~		10
~~Note 4~~ — Accounts Receivable, Net		129

Note 54 — Prepaid Expenses and Other Current Assets		139

Note ~~6 —~~5— Premises and Equipment, net		1310

Note 76 — Goodwill and Intangible Assets, net		1310

Note 87 — Accounts Payable, Accrued Expenses and Other Current Liabilities		1411

Note 98 — Equity Based Compensation		1512

Note 109 — Cost of Revenue		1613

Note 1110 — Selling, General and Administrative Expenses		1714

Note ~~12 —~~11— Other Income (Expense), Net		1714

Note ~~13 — Income Taxes~~		17
~~Note 14~~12 — Earnings Per Share		1815

Note ~~15 — Segment Reporting~~		19
~~Note 16~~13 — Commitments and Contingencies		2215

Note 14 — Segment Reporting		15

Item 2 Management’s Discussion and Analysis of Financial Condition and Results of Operations ~~(see Table of Contents at front of section)~~		2317

Item 3 Quantitative and Qualitative Disclosures about Market Risk		4533

Item 4 Controls and Procedures		4533

PART II — Other Information

Item 1 Legal Proceedings		4634

Item 1A Risk Factors		4634

Item 2 Unregistered Sales of Equity Securities and Use of Proceeds		4634

Item 3 Defaults Upon Senior Securities		4634

Item 4 (Removed and Reserved)		4634

Item 5 Other Information		4634

Item 6 Exhibits		4634

SIGNATURES		47

Exhibit 31.1
Exhibit 31.2
Exhibit 32.1


	September 30,			December 31,			March 31,			December 31,
(in thousands)	2010			2009			2011			2010

Third-party Accounts Receivable	$	15,942		$	11,638		$	17,432		$	19,039
Unbilled Fees		28,816			9,073			34,562			32,055
Receivable from Ocwen		2,556			10,066			2,850			3,950
Other Receivables		1,100			416			1,478			583

		48,414			31,193			56,322			55,627
Allowance for Doubtful Accounts		(1,642	)		(696	)		(3,314	)		(2,132	)


Total	$	46,772		$	30,497		$	53,008		$	53,495


	September 30,			December 31,			March 31,			December 31,
(in thousands)	2010			2009			2011			2010

Computer Hardware and Software	$	30,135		$	23,591		$	33,164		$	32,931
Office Equipment and Other		9,411			9,203			9,960			9,717
Furniture and Fixtures		2,168			2,663			2,258			2,226
Leasehold Improvements		4,201			3,441			5,348			4,501

		45,915			38,898			50,730			49,375
Less: Accumulated Depreciation and Amortization		(29,758	)		(27,490	)		(33,820	)		(31,882	)


Total	$	16,157		$	11,408		$	16,910		$	17,493


															Weighted
		Weighted Average	Gross Carrying Amount				Accumulated Amortization				Net Book Value				Average		Gross
	Estimated														Estimated		Carrying Amount				Accumulated Amortization					Net Book Value
	Useful Life		September 30,		December 31,		September 30,		December 31,		September 30,		December 31,		Useful Life		March 31,		December 31,		March 31,			December 31,		March 31,		December 31,
(dollars in thousands)	(Years)		2010		2009		2010		2009		2010		2009		(Years)		2011		2010		2011			2010		2011		2010

Definite-lived Intangible Assets
Trademarks		12	$	10,200	$	2,800	$	2,196	$	1,447	$	8,004	$	1,353		16	$	10,200	$	10,200	$	2,578		$	2,346	$	7,622	$	7,854
Customer Lists		19		37,700		37,700		6,919		5,334		30,781		32,366		19		37,700		37,700		8,838	(a)		7,447		28,862		30,253
Operating Agreement		15		35,000		—		1,555		—		33,445		—		20		35,000		35,000		2,042			1,604		32,958		33,396
Non-compete Agreements		4		1,200		—		200		—		1,000		—
Non-compete Agreement																4		1,200		1,200		350			275		850		925


Total Intangible Assets			$	84,100	$	40,500	$	10,870	$	6,781	$	73,230	$	33,719			$	84,100	$	84,100	$	13,808		$	11,672	$	70,292	$	72,428


	March 31
(in thousands, except per share amounts)	2011		2010

Weighted-Average Fair Value at Date of Grant Per Share	$	15.60	$	11.03
Intrinsic Value of Options Exercised	$	1,804	$	1,818
Fair Value of Options Vested	$	304	$	15


(in thousands)	Consideration
Cash	$	29,000
Common Stock		23,900
Put Option Agreements at Fair Value		1,289
Working Capital Adjustment		835


Total Consideration	$	55,024


(in thousands)
Cash	$	2,170
Accounts Receivable		4,279
Prepaid Expenses and Other Current Assets		321
Premises and Equipment		18
Identifiable Intangible Assets		43,600
Goodwill		10,218

		60,606
Accounts Payable and Accrued Expenses		(2,176	)
Other Current Liabilities		(138	)
Non-controlling Interests		(3,268	)

Total Purchase Price	$	55,024


	Nine Months Ended
	September 30, 2010
(in thousands, except per share amounts)	As Reported		Pro Forma
Revenue	$	209,901	$	211,545
Net Income Attributable to Altisource		32,485		32,357
Earnings Per Share — Diluted		1.24		1.24


	Three Months Ended				Nine Months Ended
	September 30, 2009				September 30, 2009
(in thousands, except per share amounts)	As Reported		Pro Forma		As Reported		Pro Forma
Revenue	$	54,064	$	59,755	$	146,486	$	162,459
Net Income Attributable to Altisource		8,644		10,077		20,098		24,104
Earnings Per Share — Diluted		0.36		0.40		0.83		0.95


(in thousands)	Mortgage Services		Financial Services			Technology Products		Total
Balance, December 31, 2009	$	—	$	7,706		$	1,618	$	9,324
Acquisition of MPA		10,218		—			—		10,218
Component 2 Amortization		—		(4,162	)		—		(4,162	)

Total	$	10,218	$	3,544		$	1,618	$	15,380


(a)		Prior to our acquisition of NCI in 2007, NCI completed an acquisition which created tax-deductible goodwill that amortizes for tax purposes over time. When we acquired NCI in 2007, we recorded a lesser amount of goodwill for financial reporting purposes than what had previously been recorded at NCI for tax purposes. This difference between the amount of goodwill recorded for financial reporting purposes and the amount recorded for taxes is referred to as “Component 2” goodwill and it resulted in our recording periodic reductions firstly to our book goodwill balance in our consolidated financial statements. As our book goodwill balance was fully written off at December 31, 2010. We continue to amortize the remaining Component 2 goodwill for U.S. tax purposes by reducing certain intangible assets by the remaining tax benefits of the Component 2 goodwill. The amount amortized was $0.9 million for the three months ended March 31, 2011. The balance of Component 2 goodwill remaining was $9.9 million as of March 31, 2011 which should generate $6.0 million of reductions of intangible assets.


(in thousands)	Lease Costs			Lease costs
Balance, December 31, 2009	$	916

Balance, December 31, 2010				$	672
Payments		(204	)		(127	)

Balance, September 30, 2010		712
Balance, March 31, 2011					545
Less: Long-Term Portion		503			(420	)


Facility Closure Cost Accrual, Current Portion	$	209
Facility Closure Cost Accrual, current portion				$	125


				Weighted
				Average
	Restricted			Grant Date
	Shares			Fair Value
Outstanding at December 31, 2009		3,236		$	18.00
Granted		—			—
Forfeited		—			—
Vested		(3,236	)	$	18.00

Outstanding at September 30, 2010		—			—


														Three Months Ended March 31, 2010
	Nine Months Ended September 30, 2010																					Corporate
									Corporate Items and			Consolidated		Mortgage		Financial			Technology			Items &			Consolidated
(in thousands)	Mortgage Services		Financial Services			Technology Products			Eliminations⁽¹⁾			Altisource		Services		Services			Services			Eliminations			Altisource

Revenue	$	137,803	$	45,642		$	37,422		$	(10,966	)	$	209,901	$	32,383	$	20,045		$	11,974		$	(3,428	)	$	60,974
Cost of Revenue		84,622		37,538			20,555			(10,966	)		131,749		21,293		14,526			6,647			(3,112	)		39,354

Gross Profit		53,181		8,104			16,867			—			78,152		11,090		5,519			5,327			(316	)		21,620
Selling, General and Administrative Expenses		10,683		11,997			4,040			13,448			40,168
Selling, General and Administrative															2,443		4,100			1,106			4,420			12,069

Income (Loss) from Operations		42,498		(3,893	)		12,827			(13,448	)		37,984		8,647		1,419			4,221			(4,736	)		9,551
Other Income (Expense), net		649		(38	)		(45	)		100			666
Other Expense, net															3		(16	)		(12	)		(47	)		(72	)

Income (Loss) Before Income Taxes	$	43,147	$	(3,931	)	$	12,782		$	(13,348	)	$	38,650	$	8,650	$	1,403		$	4,209		$	(4,783	)	$	9,479


Transactions with Related Parties Included Above:
Transactions with Related Parties:
Revenue	$	90,749	$	110		$	13,635		$	—		$	104,494	$	24,762	$	51		$	4,438		$	—		$	29,251

Selling, General and Administrative Expenses	$	—	$	—		$	—		$	811		$	811	$	—	$	—		$	—		$	324		$	324


	Three Months Ended September 30, 2009
									Corporate Items and			Consolidated
(in thousands)	Mortgage Services		Financial Services			Technology Products			Eliminations⁽¹⁾			Altisource
Revenue	$	29,141	$	15,837		$	12,451		$	(3,365	)	$	54,064
Cost of Revenue		17,262		12,635			5,582			(2,026	)		33,453

Gross Profit		11,879		3,202			6,869			(1,339	)		20,611
Selling, General and Administrative Expenses		1,238		6,802			1,084			1,941			11,065

Income (Loss) from Operations		10,641		(3,600	)		5,785			(3,280	)		9,546
Other Income (Expense), net		52		2,469			(51	)		76			2,546

Income (Loss) Before Income Taxes	$	10,693	$	(1,131	)	$	5,734		$	(3,204	)	$	12,092


Transactions with Related Parties Included Above:
Revenue	$	20,963	$	28		$	5,044		$	—		$	26,035

Selling, General and Administrative Expenses	$	531	$	85		$	294		$	(388	)	$	522

Interest Expense	$	7	$	147		$	39		$	—		$	193


	Nine Months Ended September 30, 2009
									Corporate Items and			Consolidated
(in thousands)	Mortgage Services		Financial Services			Technology Products			Eliminations⁽¹⁾			Altisource
Revenue	$	70,861	$	49,624		$	35,133		$	(9,132	)	$	146,486
Cost of Revenue		41,042		40,514			18,042			(7,793	)		91,805

Gross Profit		29,819		9,110			17,091			(1,339	)		54,681
Selling, General and Administrative Expenses		4,913		14,632			3,880			3,791			27,216

Income (Loss) from Operations		24,906		(5,522	)		13,211			(5,130	)		27,465
Other Income (Expense), net		29		1,354			(304	)		76			1,155

Income (Loss) Before Income Taxes	$	24,935	$	(4,168	)	$	12,907		$	(5,054	)	$	28,620


Transactions with Related Parties Included Above:
Revenue	$	51,355	$	66		$	15,801		$	—		$	67,222

Selling, General and Administrative Expenses	$	2,712	$	467		$	1,517		$	(388	)	$	4,308

Interest Expense	$	30	$	1,029		$	231		$	—		$	1,290


					Total number
					of shares
					purchased as		Maximum number
	Total		Weighted		part of publicly		of shares that may
	number of		average		announced plans		yet be purchased
	shares		price paid		or		under the
Period	purchased		per share		programs⁽¹⁾		plans or programs
Common shares^(1):
July 1 — 31, 2010		—	$	—		—		3,784,618
August 1 — 31, 2010		—		—		—		3,784,618
September 1 — 30, 2010		86,098		26.81		86,098		3,698,520

Total common shares		86,098	$	26.81		86,098		3,698,520


	ALTISOURCE PORTFOLIO SOLUTIONS S.A. (Registrant)

Date: ~~October~~April 28, ~~2010~~2011	By:	/s/ Robert D. Stiles
		Robert D. Stiles
		Chief Financial Officer (On behalf of the Registrant and as its principal financial officer)