Impac Mortgage met margin calls, but stopped funding Alt-A loans
August 7th, 2007, 7:13 am · 22 Comments · posted by Mathew Padilla, Reporter
Impac Mortgage Holdings in Irvine said today that it has met all margin calls to date by its creditors, but that it has stopped funding loans to borrowers in the mid-range credit category known as Alt-A, marking a major shift for the company.
The real estate investment trust also said it has negotiated sales on $1 billion of $1.6 billion of loans held on credit lines. The sales should close over the next 30 days.
Margin calls by creditors helped drive Melville, N.Y.-based American Home Mortgage Investment Corp., which also does Alt-A loans, into bankruptcy on Monday.
Impac has almost exclusively focused on Alt-A loans in the past, doing a small portion of subprime loans and commercial loans. It cited volatility in the market for bonds backed by Alt-A mortgages.
From now on, Impac seeks to make loans that it can sell to Freddie Mac and Fannie Mae, which are sponsored by the government and invest in mortgages to provide liquidity to the market. Right now some analysts say loans that they buy directly, known as conforming loans, are the only stable portion of the market still offering the best interest rates.
Jumbo rates — rates to people with good credit but who borrow too much money to qualify for conforming loans — have spiked. The Wall Street reports today that:
“Lenders were charging an average 7.34% for prime 30-year fixed-rate jumbo loans yesterday, according to a survey by financial publisher HSH Associates. That is up from an average of about 7.1% last week and 6.5% in mid-May.”
As for Impac, the company said it has reduced its workforce in the past to save on costs, and it “will continue to make additional adjustments as necessary. While this is a difficult and painful decision, we believe that it’s a prudent strategy in light of the current business environment.”
Joseph Tomkinson, Impac’s chief executive, said in the statement, “We would like to remind our stockholders that these rapid changes are widespread in our industry and while we are continuing to assess the market daily and cannot make any assurances, we believe that we are taking the right steps to preserve long term stockholder value.”
To read the full statement CLICK HERE.
The stock has been up and down in early trading today. Last time I checked it was down nearly 6 percent to $1.60.
August 7th, 2007 at 8:04 am
So how are they going to make any money???? Wasnt there entire business centered around Alt A loans
Anyone have a link to the story from earlier in the year when the CEO said in the register that everything is fine?
August 7th, 2007 at 9:02 am
Everything has been just fine for the CEO for a very long time. No exposure… No burns!
August 7th, 2007 at 9:05 am
they aren’t making much money, look at their stock, just dropped below $1.00.
They might cut their full time employees down to 32 hours a week…
August 7th, 2007 at 9:17 am
it’s a fast-buck game, make a ton of money in a hurry and then get out. companies like impac are not designed for the long haul; they’re the hare in the race.
i feel sorry for the good folks that work there. severances are gone and competition will be tough in the job market.
August 7th, 2007 at 11:21 am
Just heard IMH stock trading halted at NYSE.
I’m thinking this is it. They’re done.
August 7th, 2007 at 11:44 am
They are still trading. No need to start false rumors. They have it bad enough already.
August 7th, 2007 at 11:59 am
Apologize - rumor is trade is halted on the floor. Electronic trades are still going on. I dont really understand the difference though. Anyone?
August 7th, 2007 at 12:06 pm
Impac is now a PART TIME employer, they cut everyones hours,,oh sorry, everyone except the managers of course
August 7th, 2007 at 12:13 pm
Bankrupcy is the only choice for Impac to protect itself from creditors. Leave the mess for someone else to clean up.
August 7th, 2007 at 1:24 pm
Floor trading probably did get halted. Rule 123D states that any stock that may trade below $1 and begins to trade at $1.05 can be immediately halted and resumed once electronic trading has traded above a $1.05 for a period of time.
The main difference to floor trading is the size of the trades with floor trading being in “lots” of 10,000 shares each for each “lot”.
August 7th, 2007 at 1:31 pm
NOTICE:
Brand new office space (fully furnished), soon to be available. Great location: Jamboree @ McArthur.
August 7th, 2007 at 1:48 pm
Please Matt, get Joe back on the horn and find out what’s happening. The bath water has gotten awfully cold and the baby is circliing the drain…………….
I would hate to see Wall Street do to IMPAC what Joe said they did to New Century - that fine upstanding lending institution.
August 7th, 2007 at 2:39 pm
LoanWithNoHome :
put yourself in Joe’s shoes, like he wants to spend his time getting interviewed in this 11th hour.
for a buck a share , he should take the company private.
August 7th, 2007 at 4:45 pm
One of the Regional sales managers said today 60% of the workforce is gone having been laid off or quit. The rest are just waiting for the hammer to drop. A sad ending to what at one time was a great place to work!
August 7th, 2007 at 5:57 pm
Shame on all of you posting such negative comments. Are you all that miserable that you want a company in your own community, that employs your neighbors to fail? How sad of a life must one lead when the only pleasure they get derives from wishing for hardship. Just remember karma comes back around tenfold.
August 7th, 2007 at 8:42 pm
Dear ShameonYOU,
These companies were walking around like they owned the earth.
August 7th, 2007 at 8:49 pm
They are now crashing down to earth ,and by the way shame on you
karma is coming around and its hitting you now, i am pretty sure you are one of the managers who don’t even belong there and who treated your workers so bad so sit back and enjoy…
August 7th, 2007 at 11:17 pm
ShameonYOU,
Your comments are repulsive.
This company may employ my neighbors, but they also need to take responsibility for our other neighbors that will be walking from their homes due to teaser programs that Impac (and many other lenders and investors) made MILLIONS & MILLIONS from over the past several years.
Per your comment about KARMA coming back around tenfold… You are correct. However, it is BAD KARMA and it’s headed straight at 19500 Jamboree Road, Irvine.
August 8th, 2007 at 8:10 am
X I live on the Other side of the country.. I dont even live in CA.
Dr What? my answer to you is these people knew what they were getting into. Dont blame the lenders so much as the brokers who inflated the borrowers wages and blatantly commited fraud on many of these loans. Also blame the borrowers for trying to keep up with the Jones’ s That is the american dream after all right?.. He who dies with the most debt wins.. its laughable but its the truth.. you cant honestly tell me that this whole meltdown is solely the brokers and the lenders fault.. If you honestly think that, your blind.
August 8th, 2007 at 8:22 am
yes, I too live on the other side of the country and read the OC Register religiously. Nice try Shameonyou. Why don’t you try being honest, oh I forgot you are one of the higher ups at Impac and don’t have that capability.
August 8th, 2007 at 2:17 pm
Shameonyou,
You must be that bad IFC manager that no one likes!
Karma will hunt you when you start your new job seach soon!!
August 8th, 2007 at 11:14 pm
ShameonYOU -
I hear where you are coming from… but please notice my posts all over these blogs. I’ve made it clear again and again that the problem extends from the borrower up to the wall street trader. GREED can be found at all levels… Fraud can be found at most levels.
My issue with Impac (as well as several other lenders and investors), is that they lost sight of their credit policies to satisfy their securitization strategy. Production became more important to this company than quality.
To boot, the board and executives have long since cashed out on their stock and have made absolutely ZERO effort to purchase any of it back. A publicly traded company that has no stock ownership by its board and executives is a YELLOW FLAG in any sector.
This industry will not have the opportunity to begin the healing process until all the cancer is removed.