Impac Mortgage Holdings (IMH) posted a net loss for the year ended 2013 of $8.2 million, or 94 cents per diluted common share, as compared to a net loss of $3.4 million, or 42 cents per diluted common share, for the year ended 2012.

While the firm had strong revenues of $13.25 million from real estate services, its mortgage lending arm saw a $1.2 million loss, and its long-term mortgage portfolio saw an annual loss of $4.25 million. Continuing operational losses of $6.178 million and corporate losses $13.94 million undercut the company’s annual results.

Continuing operations include the mortgage lending, real estate services, long-term mortgage portfolio and corporate segments. A recent expansion into warehouse lending is expected to help reverse fortunes, as early signs indicate.

"During 2013, our warehouse borrowing capacity increased to $265 million at December 31, 2013, with our four, warehouse lender relationships, including one relationship with a major national financial institution," the earnings state. "To date, we have increased our total borrowing capacity to $290 million."

In 2013, mortgage lending net earnings decreased by $18.8 million, to a loss of $1.2 million. The decrease was due to margin compression, an increase in interest rates reducing volumes, an increase in lending compliance efforts and certain costs associated with the roll out of the company’s new Loan Origination System, its report said.

“After a year of significant expansion of our lending platform in 2012, 2013 was a challenging year. Although lending volume slightly increased in 2013 to $2.5 billion as compared to $2.4 billion in 2012, margin compression, an increase in interest rates, increase in lending compliance efforts and the roll out of our new LOS system resulted in a very challenging year for us,” the statement read.

The change in the pace of refinances owing to the rising interest rates in 2013 were also blamed for the decline.

“With the increase in rates, our lending volumes in the latter part of 2013 were lower than what we anticipated. The higher interest rates and the competition for a lower level of originations caused profit margins to decrease significantly. It also took us time to reduce staffing and operations that were in place for the expected higher volume in 2013,” the company statement said.

In the fourth quarter of 2013, Impac sold 33 retail branches and consolidated its lending fulfillment centers in an effort to reduce costs, streamline our operations and focus on expanding lending volumes in wholesale, correspondent and retail call center.

 The real estate services segments continues to earn consistent profits and posted net earnings of $13.3 million for the year ended December 31, 2013, as compared to $12.6 million for the same period in 2012.

As the principal balance of loans in the long-term mortgage portfolio continues to decline from principal payments from borrowers, payoffs of loans, as well as the liquidation of defaulted loans, the net interest income from the loans declines, the company said.

The full earnings report can be read here.

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