Impac Mortgage Holdings, Inc. Announces Business Update
NEWPORT BEACH, CA, March 8, 2023–(BUSINESS WIRE)–Impac Mortgage Holdings, Inc. (NYSE American: IMH) (the “Company”) is providing the following business update:
The Company continues to responsibly evaluate its operational strategies to adapt to current market and industry conditions, including business model reviews and cost reduction initiatives.
In December 2022, the company negotiated a buyout of its old commercial lease for $3.0 million, reducing its office space from 120,000 to 19,000 square feet. The move was made possible by the company’s ability to maintain a hybrid and remote workforce both during and after the Covid crisis, thereby minimizing the need for physical office space. The term of the new lease expires July 31, 2025 with a total cost of approximately $800,000 over the term of the new lease compared to over $8.8 million remaining under the previous lease.
Consistent with its business review and cost reduction initiatives, the firm recently repositioned its direct retail lending business into a mortgage broker execution model. Shifting to a broker model allows the Company to develop a variety of products that serve its national consumer base at a reduced cost per loan due to significant reductions in specialized staff, operations, technology and business facilitation costs. The broker channel will support an expanded range of credit products and programs, and will offer enhanced flexibility in credit, pricing, best-in-class technology, and product development and maintenance. The company has partnered with established lenders to ensure its customers continue to receive a streamlined experience. The Company anticipates that non-QM origins will continue to be the dominant product in the mortgage brokerage channel.
The Company’s Third Party Origination (“TPO”) channel, in line with industry cohorts, saw significant deterioration in volume and margin in 2022. These conditions continued into the first quarter of 2023. The company has decided to stop operations within the TPO channel. The Company will continue to deliver on its pipeline and associated commitments and commitments to its business-to-consumer and business-to-business partners as it has in the past. The Company continues to enjoy a strong reputation with its warehouse lenders, aggregate borrowing investors, regulators, vendors and subserving counterparties.
Due to the Company’s lack of conventional GSE origination volume and maintenance rights in recent years, with no direct GSE supplies to Fannie Mae or Freddie Mac since 2016 and 2020 respectively, the Company intends to voluntarily relinquish its GSE vendor/service provider designation, which will be in place during was suspended during these non-delivery periods. The Company anticipates being a third party to support its brokerage model as needed.
Mr. George A. Mangiaracina, Chairman and CEO of Impac Mortgage Holdings, Inc. commented, “The residential mortgage market continues to be challenged by adverse macroeconomic conditions ushered in by interest rate and credit dislocations that began in the fourth quarter of 2021. Non-transitory inflation and Fed tightening combined with widening credit spreads have reduced the addressable market for our product offerings. Despite the consolidation and closure of competitors, excess industry capacity remains, as evidenced by participants pricing at lower net margins in search of market share. The company has no intention of engaging in systematic, non-commercial activities. The company has no transparency as to when these dislocations will subside and the industry will return to normalized volumes and margins. The proactive initiatives undertaken by the Company in 2022 and early 2023 have helped align stakeholders on the Company’s capital stack and lower overall operating costs. The steps the company outlines in this business update continue the theme of removing complexity and reducing costs in the company’s corporate and operational verticals, and allow the company to focus on complementary strategic ventures, adjacent revenue opportunities and thus related capital raising and corporate financing activities.”
This press release contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements, some of which are based on various assumptions and events beyond our control, can be qualified by reference to a or multiple future time periods or through the use of forward-looking terminology such as “may”, “able”, “will”, “intend”, “believe”, “expect”, “likely”, “possibly”, “appear”, “should” , “may”, “seem”, “anticipate”, “expectations”, “plan”, “assure”, “desire” or similar terms or variations on these Terms or the negative of these Terms. The forward-looking statements are based on management’s current expectations. Actual results could differ materially due to a number of factors, including but not limited to the following: any adverse effect or disruption to the Company’s operations; changes in general economic and financial conditions (including federal monetary policy, changes in interest rates and inflation); interest rate increases, inflation and margin compression; ability to broker successfully; ability to successfully sell loans to third party investors; successful development, marketing, sale and financing of new and existing financial products; volatility in the mortgage industry; performance of third-party sub-service providers; our ability to manage personnel costs; our ability to successfully utilize storage capacity and meet financial agreements; our ability to comply with the NYSE American’s ongoing listing requirements for our common stock; increased competition in the mortgage lending industry from larger or more efficient companies; problems and system risks related to our technology; Ability to successfully create cost and product efficiencies through emerging technologies, including cyber risk and data security risk; greater than expected increases in default rates or loss severity and mortgage related losses; ability to obtain additional financing through credit and repurchase facilities, debt or equity financing, strategic relationships or otherwise; the terms of any financing, whether debt or equity, that we receive and our expected use of financing proceeds; increase in loan repurchase requests and ability to adequately service repurchase obligations; failure to create brand awareness; the outcome of any claims to which we are subject, including any settlement of any litigation or regulatory action pending against us, or other legal contingencies; impact on the US economy and financial markets due to the ongoing impact of the COVID-19 pandemic; and compliance with applicable local, state and federal laws and regulations.
For a discussion of these and other risks and uncertainties that could cause actual results to differ from those contained in the forward-looking statements, please see our most recent Annual Report on Form 10-K and our Quarterly Reports on Form 10-Q, which we provide with the SEC and, in particular, the discussion of “Risk Factors” therein. This document speaks only as of its date, and we undertake and expressly disclaim any obligation to publicly release the results of any revisions made to any forward-looking statements to reflect the occurrence of anticipated or unanticipated events or circumstances after the date of such statements , unless required by law.
about the company
Impac Mortgage Holdings, Inc. (IMH or Impac) provides innovative mortgage lending and real estate solutions that meet the challenges of today’s economic environment. Impac’s business includes mortgage lending, services, portfolio loss mitigation, real estate services and management of the securitized long-term mortgage portfolio, which comprises the residual interests in securitisations.
For additional information, questions or comments, please contact Justin Moisio, Chief Administrative Officer, at (949) 475-3988 or email Justin.Moisio@ImpacMail.com.
Website: http://ir.impaccompanies.com or www.impaccompanies.com.
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Justin Moisio, Chief Administrative Officer