Following up on its original two-week suspension announcement, Impac Mortgage announced its lending activities will remain on hold as it continues to try and manage the growing strains on the mortgage ecosystem due to COVID-19.
The mortgage lender first announced on March 30 that it instituted a temporary suspension of all lending activity, stating in its business update that it’s trying to navigate the dislocation associated with volatility in the interest rate and credit risk mortgage markets.
In the new business update released on April 15, Impac stated, “While mortgage markets may appear to be normalizing, the industry, most acutely for non-bank mortgage originators and servicers, continues to manage to the uncertainties of the various initiatives promulgated by the U.S. Federal Government, the Federal Reserve and other state and local governmental and quasi-governmental agencies relating to economic stimulus, mortgage principal and interest forbearance, liquidity and origination and servicing practices.
“Until the industry achieves clarity on these items, the company’s lending activities will remain on hold,” the announcement stated.
When Impac first announced the suspension, the business update pointed to the lack of communication from one of its whole loan investors, which it said was driving uncertainty and concern among some of its capital markets counterparties. The fear is that the whole loan investor, which it didn’t name, might breach the mandatory purchase commitment that’s required in its contract, Impac said.
The latest announcement explained that Impac continues to “believe it prudent to de-risk and to protect liquidity during this unprecedented time. These actions are crucial to preserving long-term value for our capital partners and stakeholders.”
Impac, like many other companies in the mortgage industry, is trying to share updates as they have them on the impact of the pandemic on their business, as they try to figure out how to operate amid the coronavirus.
“The novel coronavirus outbreak continues to have a real-time impact on all business sectors,” the business update stated. “The Company remains focused on prioritizing liquidity, preserving its business relationships and caring for its employees, their families and its community.
“The rapid development and fluidity of the effects of the coronavirus precludes any prediction as to the ultimate adverse impact of the coronavirus on its business. Nevertheless, the coronavirus presents material uncertainty and risk with respect to the Company’s performance, financial condition, results of operations and cash flows.”