Impac’s loss widens, woes mount
August 14th, 2007, 9:30 am · 14 Comments · posted by Mathew Padilla, Reporter
Impac Mortgage Holdings in Irvine today outlined the details behind its second-quarter loss of $152.5 million, which compares to a gain of $26.4 million a year ago and a loss of $121.7 million in the first quarter of this year. Its loss was first reported Friday.
Impac is being rattled by homeowners skipping mortgage payments and by a drop in demand for bonds backed by its loans. In a filing, the company said it set aside $163.0 million for anticipated future losses on dud loans.
Sour loans are mounting quickly on Impac’s books. Its loans 90-plus days past due and foreclosed real estate increased 22 percent to $1.6 billion over the past three months.
The company said it does not expect to pay a dividend for the remainder of the year. And it reiterated its August 7 announcement that it stopped making Alt-A loans, which it has focused on since its founding in 1995. It’s focusing on making loans it can sell to government-sponsored buyers Fannie Mae and Freddie Mac.
And the real estate investment trust’s taxable income swung to a loss of $18.9 million, vs. positive income of $20.6 million a year ago and $18.86 million in the first quarter of this year.
Impac said again it has met all margin calls so far from creditors. But ….
We have received a significant amount of margin calls from our lenders and continue to receive margin calls due to the current market environment, we intend to satisfy these margin calls; however, we cannot make any assurances we will satisfy margin calls received in the future. In addition, we are operating under waivers provided by certain lenders, as certain lenders have waived certain covenants that require us to maintain positive net income and certain leverage ratios. There can be no assurance that we will be able to obtain future waivers or new waivers if covenants are not met, or that we will be able to obtain waivers on favorable terms. Further, we have negotiated sales of approximately $1.0 billion of our $1.6 billion of loans held on financed facilities.
Impac said it has $5.2 billion in credit lines to fund loans, down from $5.7 billion at the end of the year. Here’s more on the status of those lines:
For the quarter ended June 30, 2007, the Company obtained required waivers of non-compliance with the financial covenants related to earnings (as defined) for the reverse repurchase agreements in which a default of the covenants occurred. Additionally, one of the Company’s reverse repurchase agreements with total capacity of $750 million expired in June of 2007, per the terms of the arrangement and was not renewed.
And one more thing: Unlike the first-quarter loss of $121.7 million, its recent earnings decline was not at all attributable to a drop in the value of its derivatives. In fact, its derivatives gained $56.9 million in value in the period.
August 14th, 2007 at 5:44 pm
it’s simple : it’s Tuesday, if the conf call wasn’t tomorrow, i’d give them 5 business days to announce their bankruptcy.
with this news, i can almost guarantee their conf call tomorrow at 9am will not include a Q&A section.
remember, NEW simple cancelled their conf call all together when things hit the fan.
August 14th, 2007 at 7:00 pm
Matt:
How about just a couple of months ago when the CEO was bragging that they only made Alt-A loans and they would be insulated.
Today they suspend making their core product.
That isn’t a good development.
Good luck getting that next interview.
What happens to basically a service business when the primary product is discontinued.
I see a BK filing soon.
August 14th, 2007 at 10:35 pm
Buckle up folks because crap is going to hit the fan on Wed the 15th!
August 15th, 2007 at 9:30 am
wow, i’ve listened to each conf call for the past 2 years and that one didn’t have a good feeling.
odd that gretchen, the CFO was missing, she’s normally present.
20% haircut on REO’s at auction, yikes.
as expected, the Q&A portion was brief.
funny how Richard Eckhart called in; he’s the genius that upgraded IMH stock just before it went into a death spiral.
August 15th, 2007 at 9:56 am
Gretchen has been missing for about 10 weeks now… just disappeared one day on an LOA. No word as to why she’s gone or when she’s coming back. Maybe she couldn’t take the heat?
August 15th, 2007 at 10:21 am
So, with no more Alt-A product, what is everyone doing with their time
over there? Did the conduit division shut down or are they combined
with the wholesale group now? Perhaps Joe will need to sell his
jet now to meet payroll!! The days of high living seem to be over.
August 15th, 2007 at 10:32 am
If gretchen was terminated, her “LOA” designation is genius.
This enables the Company to avoid disclosure of her termination through an 8-K filing.
i love loop holes like this = )
August 15th, 2007 at 10:58 am
anyone know what the real situation is here and should we jump ship now ?
August 15th, 2007 at 11:08 am
an executive like a CFO has an annual employment contract, so no matter what, gretchen is going to get paid through a certain date no matter what they disclose.
in the middle of company crisis, i find it hard to believe she could walk-in to Joe’s office and plead a case for why she needs to take some personal time off. nothing could really warrant a 10-week break right now.
i think she has two kids and her age is disclosed in the proxy (which is ~43), so pregnancy is off the table.
if you still work there, walk-up to her office, is it dark all of the time.
August 15th, 2007 at 1:28 pm
Gretchen has 4 kids. Triplets and a son who is older than the triplets.
Pregnancy is not the LOA. Sure is interesting how this is all shakin’ up.
Ask Gretchen’s assistant. I think she is in charge of distributing the seats for the suite at the Honda Center and Angel stadium. At least she is busy passing out tickets. I wonder when they will pull out of having the suite and box seats??
August 15th, 2007 at 1:40 pm
They are passing out tickets left and right
August 15th, 2007 at 2:12 pm
It’ll be interesting to see if gretchen signs the 10-Q which is due to be filed tomorrow (i think).
August 15th, 2007 at 2:18 pm
someone talk some realness in regards to impacs future forget about those goddamn tickets and gretchen who cares about her
August 16th, 2007 at 10:05 am
first magnus done