Impac resumes mortgage originations, but not any non-QM products

Impac Mortgage Holdings has resumed originating mortgages, but at this point will not be offering the non-qualified loan products it had previously focused on.

On March 31, the company put a halt on originations, for what it expected to be a two-week period. It was a reaction to the Federal Reserve's purchase of mortgage-backed securities, which was done in an effort to stabilize a coronavirus-disrupted economy. However, the Fed's move resulted in margin calls and ultimately took liquidity out of the private-label secondary market.

But this week, Impac announced that it's resuming business.

"We have since taken a number of steps to derisk the balance sheet and improve our cash reserves and are now prepared to return to originating loans, as we have for the past 25 years, through numerous economic cycles," George Mangiaracina, Impac's chairman and CEO, said in a press release.

For now, Impac will focus on conforming and government lending programs, which are segments that have "demonstrated adequate and stable capital markets distribution exits," the company said.

Impac added it was evaluating the nonagency jumbo and non-QM areas "and will continue to monitor these market segments as facts and circumstances evolve particularly relating to the reemergence of non-QM."

Among the actions the company took since March 31 was to reduce its warehouse borrowing capacity to $600 million from $1.7 billion and its counterparties to three from six.

Its warehouse line had an outstanding balance of $10 million at the end of May. There was $30.8 million in loans held for sale on its books, $11 million of that being non-QM.

That is a much different position from Dec. 31, when the warehouse balance was $701.6 million and loans held for sale totaled $782.1 million of which $274.8 million were non-QM.

Impac has also sold $4.2 million of Freddie Mac mortgage servicing rights. The initial settlement proceeds will be used to pay down the related MSR borrowing facility in its entirety.

Meanwhile, Impac has released preliminary first-quarter results, but a formal earnings release is not expected until June 24.

For the first quarter, Impac's preliminary net loss was $64.3 million per diluted common share. The release noted that in the first two months of the quarter, the company had a net profit of $4.7 million, but March's loss was $69 million.

In the fourth quarter, Impac lost $677,000 and $13 million in the first quarter of 2019. The year-ago loss was driven by a $5.6 million loss related to the value of its MSRs.

Impac also announced the creation of a new business, Copperfield Capital, looking to leverage its expertise in managing loans held for sale and other activities.

"Copperfield will provide origination and servicing solutions focusing on loss mitigation strategies, including loan modifications and restructurings to assist borrowers as they navigate through these unprecedented times. Copperfield will perform these services for the company and for unaffiliated third parties on a fee-based revenue model to meet rising market demands," the press release said.