NOTE 2 — TRANSACTIONS WITH RELATED PARTIES

Ocwen

Ocwen Financial Corporation, together with its subsidiaries (“Ocwen”), is our largest customer. Ocwen is contractually obligated to purchase certain mortgage services and technology services from us through August 2025. In connection with our acquisition of the fee-based businesses of Homeward Residential, Inc. (“Homeward”) from Ocwen on March 29, 2013 (see Note 3) and the agreement we entered into on April 12, 2013 to establish additional terms related to our agreements with Ocwen in connection with Ocwen’s acquisition of the fee-based businesses of Residential Capital, LLC (“ResCap”) (see Note 19), our agreements with Ocwen were amended to extend the term from 2020 to August 2025. Further, as part of the amendments, we will be the exclusive provider of services to Ocwen with respect to the Homeward and ResCap servicing portfolios, and Ocwen will not establish similar fee-based businesses that would directly or indirectly compete with Altisource’s services with respect to the Homeward and ResCap businesses. We settle amounts with Ocwen on a daily, weekly or monthly basis depending upon the nature of the service and when the service is provided.

Related party revenue consists of revenue earned directly from Ocwen and its subsidiaries and revenue earned from the loans serviced by Ocwen or its subsidiaries when Ocwen determines the service provider. We earn additional revenue on the portfolios serviced by Ocwen or its subsidiaries that are not considered related party revenue when a party other than Ocwen selects the service provider. As a percentage of each of our segment revenue and as a percentage of consolidated revenue, related party revenue was as follows for the three months ended March 31:

	2013		2012

Mortgage Services	68	%	69	%
Technology Services	50	%	39	%
Financial Services	<1	%	<1	%
Consolidated revenue	61	%	60	%

We record revenue we earn from Ocwen under various long-term servicing contracts at rates we believe to be market rates as they are consistent with one or more of the following: the fees we charge to other customers for comparable services, the fees Ocwen pays to other service providers, fees commensurate with market surveys prepared by unaffiliated firms and fees charged by our competitors.

Support Services

We have support services agreements with Ocwen. These services include such areas as human resources, vendor management, corporate services, six sigma, quality assurance, quantitative analytics, treasury, accounting, risk management, legal, strategic planning and compliance. Payment for the services provided is based on the fully-allocated cost of providing the service based on an estimate of the time and expense of providing the service. For the three months ended March 31, 2013 and 2012, we billed Ocwen $0.6 million and $0.8 million, respectively, and Ocwen billed us $0.7 million and $0.6 million, respectively, for services provided under these agreements. These amounts are reflected as a component of selling, general and administrative expenses in the condensed consolidated statements of operations.

Unsecured Term Loan

On December 27, 2012, we entered into a senior unsecured term loan agreement with Ocwen under which we loaned $75.0 million to Ocwen. Payments of interest were due quarterly at a rate per annum equal to the Eurodollar Rate (as defined in the agreement) plus 6.75%, provided that the Eurodollar Rate shall at no time be less than 1.50%. On February 15, 2013, Ocwen repaid the outstanding principal amount of $75.0 million plus all accrued and unpaid interest. Interest income related to this loan was $0.8 million for the three months ended March 31, 2013.

Transactions Related to Fee-Based Businesses

On January 31 2013, we entered into non-binding letters of intent with Ocwen to acquire certain fee-based businesses associated with Ocwen’s acquisitions of the Homeward and the ResCap servicing portfolios. Ocwen acquired the Homeward servicing portfolio on December 27, 2012 and the ResCap servicing portfolio on February 15, 2013. Altisource acquired the Homeward fee-based businesses from Ocwen on March 29, 2013 (see Note 3), and Altisource entered into an agreement with Ocwen on April 12, 2013 to establish additional terms related to our services in connection with Ocwen’s acquisition of the ResCap fee-based businesses (see Note 19).

Correspondent One™ and HLSS™

In July 2011, we acquired an equity interest in Correspondent One S.A. (“Correspondent One”) (see Note 8). We provided Correspondent One certain finance, human resources, legal support, facilities, technology, vendor management and risk management services. For the three months ended March 31, 2013 and 2012, we billed Correspondent One less than $0.1 million, for each period, under a services agreement. On March 31, 2013, we sold our 49% interest in Correspondent One to Ocwen for $12.6 million and recorded a current asset of $12.6 million. We received $12.6 million from Ocwen on April 2, 2013. We also provide certain origination related services to Correspondent One. We earned revenue of $0.1 million for the three months ended March 31, 2013 for these services (no comparative amount in 2012).

Home Loan Servicing Solutions, Ltd. (“HLSS”) is a public company whose primary objective is the acquisition of mortgage servicing rights and advances. In connection with the February 2012 HLSS initial public offering and subsequent thereto, HLSS acquired mortgage servicing related assets from Ocwen. Our Chairman is also the Chairman of HLSS. We provide HLSS certain finance, human resources and legal support services. For the three months ended March 31, 2013 and 2012, we billed HLSS $0.2 million and less than $0.1 million, respectively, under a services agreement.

These amounts are reflected as a component of selling, general and administrative expenses in the condensed consolidated statements of operations.

Residential and AAMC

Altisource Residential Corporation (“Residential”) and Altisource Asset Management Corporation (“AAMC”) were established, capitalized and distributed to our shareholders on December 21, 2012 and are each separate public companies (the “Separation of the Residential Asset Businesses”). For purposes of governing certain ongoing relationships between Altisource, Residential and AAMC after the Separation of the Residential Asset Businesses, and to provide for an orderly transition, we entered into certain agreements with Residential and AAMC.

Residential and AAMC have entered the growing residential single family rental market. We have agreements to provide certain services to Residential and/or AAMC related to renovation management, lease management and property management and support services such as finance, human resources, legal support, facilities, technology, vendor management and risk management pursuant to a Master Services Agreement and a Support Services Agreement. In addition, certain services related to income tax matters, trademark licenses and technology products and services are described in separate agreements. For the three months ended March 31, 2013, we billed Residential less than $0.1 million, and we billed AAMC less than $0.1 million under these agreements (no comparative amounts in 2012).