CoreLogic reported revenues of $1.788 billion for 2018, down 3 percent as organic growth and benefits of acquisitions weren't enough to offset an estimated 15 percent drop in U.S. mortgage origination unit volumes and lower appraisal management company revenues.

The company had U.S. mortgage loan origination unit volumes expected to decline around 5 percent from 2018 levels. Operating income from continuing operations of $223 million, was down 7 percent as cost productivity benefits and favorable revenue mix partially offset mortgage market headwinds in the U.S. Also, increased the amount of money reinvested in the business and took an $8 million non-cash impairment charge related to the planned exit of non-core software units including the loan origination platform.

[caption id="attachment_8671" align="alignleft" width="264"] Frank Martell[/caption]

Net income from continuing operations of $122 million, down 18 percent , reflecting a one-time benefit of $38 million in the 2017 tax provision, attributable to the U.S. Tax Cuts and Jobs Act. Diluted EPS from continuing operations of $1.49, down 15 percent. Adjusted EPS of $2.72, up 15 percent.

Adjusted EBITDA of $493 million, up 3 percent; adjusted EBITDA margin of 28 percent. Repurchased 2.3 million shares, or 3 percent of outstanding shares, for $109 million.

In the fourth quarter, Corelogic reported revenues of $403 million, down 11 percent, driven by an estimated 25 percent drop in U.S. mortgage volumes and lower AMC revenues. Operating income from continuing operations of $29 million, down 56 percent, on lower mortgage market volumes, elevated investment spending, and the above described 2018 non-cash impairment charge.

Net income from continuing operations of $13 million, down from $65 million reflecting the effects of U.S. mortgage market headwinds, the 2017 tax benefit and the 2018 non-cash impairment charge. Adjusted EBITDA of $103 million, compared to $117 million in 2017.

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“We reduced our costs significantly and drove productivity. In addition, we continued to scale our core operations, expanded our international and insurance business, accelerated the transformation of our [appraisal management company] and initiated the exit of certain non-core legacy units," said Frank Martell, president and chief executive officer of CoreLogic. “Throughout 2018, we reinvested in our business with a focus on building our core capabilities in data and technology, which we expect will be a foundation for future growth and margin expansion.”

Fourth quarter reported revenues of $403 million, compared with $454 million in the same period one year earlier. During the quarter, U.S. mortgage market volumes declined by an estimated 25 percent on lower refinancing activity and home sales.

Property Intelligence and Risk Management Solutions revenues fell 7 percent from 2017 levels to $168 million, due mainly to lower contributions from weather-related natural hazard solutions, and the impact of lower U.S. mortgage loan volumes.

Underwriting and Workflow Solutions revenue was $239 million, down 14 percent from 2017 levels, as benefits from market outperformance and higher collateral valuation platform revenues partially offset mortgage market unit declines and lower appraisal management company volumes.

Operating income from continuing operations was $29 million for the fourth quarter, compared with $65 million in 2017. Lower operating income was attributable to the impact of a 25 percent decline in origination unit volumes, lower weather-related natural-hazard revenues, larger investment in the business, as well as the 2018 non-cash impairment charge.

Fourth quarter net income from continuing operations was $13 million, a decline of $52 million when compared to 2017. The decline was primarily driven by U.S. mortgage market headwinds, the 2017 tax benefit and the 2018 non-cash impairment charge. Diluted EPS from continuing operations was $0.16 for the fourth quarter of 2018 compared with $0.78 in 2017. Adjusted EPS was $0.48 compared with $0.55 in the fourth quarter of 2017.

Adjusted EBITDA totaled $103 million in the fourth quarter compared with $117 million in the same prior year period. The year-over-year reduction in adjusted EBITDA resulted principally from lower revenues and higher levels of investment on data and technology capabilities, partially offset by cost management benefits. Property Intelligence and Risk Management segment adjusted EBITDA totaled $41 million compared to $50 million in 2017. Underwriting and Workflow Solutions adjusted EBITDA was $71 million, in-line with the prior year total of $72 million.

Despite recent declines in interest rates, January's prepayment rate was the lowest since November 2000.

Seasonal reductions in home sales outweighed any early, rate-driven rise in refinance incentive, according to the “first look” data from Black Knight. Housing turnover typically bottoms out in January and February, so prepayments could pick up again if rates remain low through the early spring home-buying season

The national delinquency rate fell by 3.5 percent and is now 13 percent below last year's level. Foreclosure starts rose seasonally month-over-month but were down more than 19 percent year-over-year. The number of loans in active foreclosure continued its downward trend; there are now 265,000 active foreclosures, down 72,000 from one year ago.

Total U.S. loan delinquency rate (loans 30 or more days past due, but not in foreclosure): 3.75%
Month-over-month change: -3.45%
Year-over-year change: -12.93%

Total U.S. foreclosure pre-sale inventory rate: 0.51%
Month-over-month change: -2.20%
Year-over-year change: -22.43%

Total U.S. foreclosure starts: 50,200
Month-over-month change: 8.42%
Year-over-year change: -19.42%

Monthly prepayment rate (SMM): 0.59%
Month-over-month change: -10.15%
Year-over-year change: -25.20%

Foreclosure sales as % of 90+: 1.93%
Month-over-month change: 40.39%
Year-over-year change: 10.83%

Number of properties that are 30 or more days past due, but not in foreclosure: 1,945,000
Month-over-month change: -68,000
Year-over-year change: -257,000

Number of properties that are 90 or more days past due, but not in foreclosure: 504,000
Month-over-month change: -7,000
Year-over-year change: -203,000

Number of properties in foreclosure pre-sale inventory: 265,000
Month-over-month change: -6,000
Year-over-year change: -72,000

Number of properties that are 30 or more days past due or in foreclosure: 2,210,000
Month-over-month change: -73,000
Yea

Ellie Mae and AI Foundry have established a partnership in which they will integrate their respective technologies and use artificial intelligence and machine learning to help lenders improve the mortgage origination process.
Lenders will benefit from the partnership through the availability of artificial intelligence-driven automation capabilities that significantly reduce labor-intensive processes associated with mortgage origination.

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The partnership and technology integration will provide numerous benefits including: Reduced time spent for loan officers to identify, collect and organize borrower documents in Ellie Mae's Encompass, Digital Mortgage Solution; increased processing efficiency by allowing loan processors to proactively identify and quickly act on missing or incomplete documentation; reduced ongoing risk and quality management in the loan manufacturing process through real-time validations and verifications of information in Encompass with the information extracted from the documents.

"Many lenders are digitally transforming their customer-facing operations while also trying to optimize their back-office systems and processes from within Encompass," said Clark Brett, vice president of business development at AI Foundry. "By integrating our technology with an innovative industry leader such as Ellie Mae, we can dramatically expand AI Foundry's reach into lenders, and help them speed mortgage originations through increased productivity and accuracy. For their customers, this translates into mortgage application approvals in hours rather than weeks."

AI Foundry's unique approach to applying visual cognitive document automation, artificial intelligence and deep learning will complement Ellie Mae's Encompass digital mortgage solution which provides one system of record that enables banks, credit unions and mortgage lenders to originate and fund mortgages and improve compliance, loan quality and efficiency.