Mortgage

Impac Mortgage restarts lending

Company has focused on de-risking its balance sheet and improving its cash reserves

Impac Mortgage announced today that it will restart lending activities after a self-imposed nine-week hiatus.

As the economy begins to reopen and stay-at-home orders wane, Impac believes that market conditions and external factors, while not fully normalized, have sufficiently stabilized to the extent that the company has elected to originate loans once again.

This update follows the April 16 announcement that Impac was continuing its March 30 suspension of lending activity – citing attempts to manage the growing strain on the mortgage ecosystem in light of COVID-19. When Impac first announced the suspension, the company pointed to the lack of communication from one of its whole loan investors, which Impac said was driving uncertainty and concern among some of its capital markets counterparts.

“2020 has been a more challenging year than any in our industry had anticipated,” said George Mangiaracina, chairman and CEO. “In March, we made the difficult but necessary decision to pause originations. We have since taken a number of steps to and are now prepared to return to originating loans, as we have for the past 25 years, through numerous economic cycles.”

Moving forward, Impac will focus on markets that have demonstrated adequate and stable capital market distribution exits, initially expected to be GSE and FHA/VA lending. The company is currently evaluating the non-agency jumbo and non-QM products as facts and circumstances evolve, particularly relating to the reemergence of non-QM.

To ensure liquidity protection and de-risk success, Impac created a wholly owned subsidiary, Copperfield Capital Corporation, to leverage existing firm expertise for management assistance with LHFS. Copperfield will provide origination and servicing solutions focusing on loss mitigation strategies, including loan modifications and restructurings, the report said.

Impac also completed the sale of $4.2 billion in unpaid principal balance of Freddie Mac MSRs, the initial settlement proceeds of which will be used to pay down the company’s related MSR borrowing facility in its entirety. Follow-on settlement proceeds from the sale are expected to be accretive to the company’s unrestricted cash balance.

“The company has satisfied all of its obligations under its warehouse lending and repurchase facilities and has chosen to right-size its borrowing capacity, since March 30, 2020 reducing capacity from $1.7 billion to $600 million and reducing warehouse counterparties from six to three. The company believes that its existing borrowing capacity is sufficient to fund its near-term origination activities,” Impac said.

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