Non-Qualified Mortgage lending boosts Impac’s 3Q earnings

Records 98% increase in origination volumes

Impac Mortgage Holdings (IMH) reported a net loss of $1.2 million or $0.13 per diluted common share, as compared to a net loss of $4.9 million or $0.56 per diluted common share in the third quarter of 2013.

When looking at the nine months ended Sept. 30, the company posted a net loss of $4.1 million or $0.44 per diluted common share. This is compared to a net loss of $4.3 million or $0.52 per diluted common share for the nine months ended Sept. 30.

Impac reported second-quarter net earnings of $82 thousand or $0.01 per diluted common share, compared to a net loss of $3 million in the first quarter of 2014 or $0.33 per diluted common share. 

The change in net results in the third quarter of 2014 as compared to the second quarter of 2014 was due to a positive impact from the growth of mortgage lending, an expected decline in real estate services revenue and a significant fluctuation in the change in estimated fair value of the residual interests portfolio.

In the third quarter of 2014, gain on sale of loans increased 40% over the second quarter of 2014 driven by a 98% increase in origination volumes.

Additionally, as a result of the anticipated ongoing runoff of Imapc’s long-term mortgage portfolio, real estate services revenue declined 26% from the second quarter. 

The $3.7 million improvement in the net results in the third quarter of 2014 over the third quarter of 2013 was primarily associated with a 37% decrease in expenses while it saw a 60% increase in mortgage originations volume.

The drop in expenses was due to the sale of a costly retail brick and mortar lending channel, at the end of 2013, following the lender’s shift to focusing on more correspondent and wholesale lending channels in 2014.

Back in July, Impac Mortgage broke into the non-QM market, offering 4 new products:  Alt-QM Jumbo, Alt-QM Agency, Alt-QM Income and Alt-QM Investor.

“We believe there is an underserved market for these programs where certain borrowers are finding financing for purchase or refinance is either non-existent or available with stringent and costly parameters,” Bill Ashmore, president of Impac Mortgage, said at the time.

In the earnings release, Joseph Tomkinson, chairman and CEO of Impac Mortgage Holdings, said, “Early indications are very positive for the growing of our AltQM pipeline. We believe this will be further strengthened by the recent commitment by several large retail originators, to roll out these products through year end and during the first quarter of 2015.”

“Even as we roll out our Alt-QM loan products, the Company wants to continue to capture a larger market share of conventional and government loan business. We want to provide a “full spectrum” of residential mortgage products to service all of our customers,” he continued.

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