Altisource Servicer Solutions

Page 8 In decision theory, a broad view of problems is an essential requirement of rational decision- making. In practice, most decision-makers tend to isolate the current decision from future ones to manage one decision at a time. 8 This common practice also applies to the way servicers and vendors typically approach decision-making for real estate assets, as evidenced by the waterfall resolution strategy. For CWCOT, the consequences of isolating decisions are: • Underweighting long-term risks and costs for short-term gains and • Overweighting short-term risks and costs to forgo greater long-term gains A well-planned decision tree framework for a CWCOT program strategy provides a controlled road map to model a broad view of probable outcomes and related risks for assets through the late-stage default lifecycle. Real-time data for the asset, market, mortgage and vendor services are synthesized in the decision engine, which presents simplified scenarios along with the calculated NPV at each time period to facilitate proactive decision-making based on tangible comparisons. By digesting voluminous data for each probable outcome to present an apples-to- apples comparison through NPV, decision-makers can quantify the costs and risks of each decision path. This controlled decision theory framework can help overcome the three obstacles presented above to effectively utilize large amounts of data, develop intuitive technology platforms and reduce information asymmetries. There are three key assumptions to the successful implementation of an integrated CWCOT strategy, as presented above: (1) the servicer has access to a qualified vendor pool that can coordinate with other vendors in the value chain and integrate with the core technology platform to reduce information asymmetries between service providers and reporting platforms, (2) the servicer has access to a technology platform, either a vendor platform or an internal platform, that can incorporate various data sets and determine the appropriate decision path(s) based upon a rules engine and (3) the servicer has access to industry-leading real estate marketing and auction capabilities for proper weighting of risks and costs associated with vendor sales execution. Vendors Specializing in FHA Services 9 In addition to the baseline requirements for compliance and service-level adherence, vendors today must align with servicer objectives. For both the servicer and the vendor, specialized FHA expertise, coupled with end-to-end process integration, can decrease operational risks and reporting gaps by eliminating operational silos and assigning clear accountability and ownership for the end-to-end CWCOT process. Vendors providing FHA offerings should integrate reporting 8 "Timid Choices and Bold Forecasts: A Cognitive Perspective on Risk-Taking," Daniel Kahneman and Dan Lovallo, Management Science, Vol. 39, No. 1, January 1993. 9 Vendors providing bundled FHA services can potentially add additional value for servicers by scaling costs and offering streamlined processes.

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