As expected, Impac Mortgage Holdings Inc. released its second quarter earnings report today, which showed a $152.5 million quarterly loss. That's an astoundingly huge number, and the company said the losses were due in part to a "$163.0 million increase in the provision for loan losses as a result of deteriorating market conditions, higher delinquencies and higher severities." That's part of it, at least -- the other part is a large number of margin calls. From the press release:
During the second quarter, the secondary and securitization mortgage markets have deteriorated, become more unpredictable and volatile, making it more difficult to sell loans and securities to investors ... Recently these market conditions required us to focus on preserving liquidity. We have received a significant amount of margin calls from our lenders, and have satisfied all the margin calls to date. As we continue to receive margin calls from our lenders in the current market environment, we intend to satisfy these margin calls, however, we cannot make any assurances we will satisfy all margin calls in the future ... In light of the continued and widely publicized volatility in the secondary and securitization markets, we have suspended funding on loans previously referred to as Alt-A loans and currently do not have any plans to originate these types of loans in the near future. At this point, the Company is only funding loans that are eligible to be sold to government sponsored agencies ...
Impac made its name in the Alt-A market, and has clearly become a shell of its former self -- and at an astounding speed. The company posted earnings of $26.4 million in the second quarter one year ago. The company also made the usual disclosures regarding waivers on its warehouse covenenants and the fact that there is no guarantee future waivers will be obtained, and said that it's reducing operating expenses everywhere it possibly can. As a REIT, it's clear that Impac is at the mercy of its creditors here.