Impac Mortgage Holdings, Inc. (NYSE American: IMH) (the
“Company”) is providing the following business update:
The Company continues to responsibly assess its operating
strategies to navigate current market and industry conditions,
including business model review and expense reduction
initiatives.
In December 2022, the Company negotiated a buy-out of its legacy
commercial lease for $3.0 million, reducing its office space
footprint from 120,000 to 19,000 square feet. The relocation was
made possible by the Company’s ability to maintain a hybrid and
remote workforce both during and following the Covid crisis,
thereby minimizing physical office space needs. The new lease term
runs through July 31, 2025 with a total expense of approximately
$800 thousand over the term of the new lease, as compared to over
$8.8 million that remained under the prior lease.
In line with its business review and expense reduction
initiatives, the Company recently repositioned its retail consumer
direct lending division into a mortgage broker fulfillment model.
The shift to a broker model allows the Company to originate a
variety of products that serve its national consumer base at a
reduced cost per loan due to significant expense abatement relative
to specialized staffing, operations, technology and business
promotion. The broker channel will support an expanded suite of
loan products and programs, offering enhanced flexibility with
respect to credit, pricing, best in class technology, and product
development and maintenance. The Company has partnered with
established lenders to ensure its consumers continue to receive an
optimized experience. The Company expects Non-QM originations to
continue to be the dominant product in the mortgage broker
channel.
The Company’s third-party origination (“TPO”) channel, in line
with industry cohorts, experienced significant volume and margin
deterioration in 2022. These conditions have persisted into the
first quarter of 2023. The Company has decided to wind-down
operations within the TPO channel. The Company will continue to
honor its pipeline and related obligations and commitments to its
business-to-consumer and business-to-business partners, as it has
done historically. The Company remains in good standing with its
warehouse lenders, whole loan take-out investors, regulators,
vendors and subservicing counterparties.
As a result of the Company’s lack of conventional GSE
origination volume and servicing rights over the past several
years, with no direct GSE deliveries to Fannie Mae or Freddie Mac
since 2016 and 2020, respectively, the Company intends to
voluntarily relinquish its GSE Seller/Servicer designation which
has been suspended during these periods of non-delivery. The
Company expects to be a third-party originator to support its
broker 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 macro-economic conditions
ushered in by rate and credit dislocation that commenced in the
fourth quarter of 2021. Non-transitory inflation and Fed
tightening, coupled with widening credit spreads, has reduced the
addressable market for our product offerings. Despite competitor
consolidation and closures, excess industry origination capacity
remains, evidenced by participants pricing to decreased net margins
in pursuit of market share. The Company has no intention of
engaging in systematic, non-economic activities. The Company has no
visibility as to when these dislocations will abate and return the
industry to normalized volumes and margins. The proactive
initiatives that the Company accomplished in 2022 and early 2023,
have helped align the stakeholders of the Company’s capital stack
and reduced its overall operating expense load. The steps the
Company outlines in this business update continue the theme of
eliminating complexity and reducing costs from the Company’s
corporate and operating verticals, permitting the Company to focus
on complimentary strategic ventures, adjacent revenue opportunities
and attendant capital raise and corporate finance activities.”
Forward-Looking Statements
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 that are beyond our control, may be identified by reference
to a future period or periods or by the use of forward-looking
terminology, such as “may,” “capable,” “will,” “intends,”
“believe,” “expect,” “likely,” “potentially,” “appear,” “should,”
“could,” “seem to,” “anticipate,” “expectations,” “plan,” “ensure,”
“desire,” or similar terms or variations on those terms or the
negative of those terms. The forward-looking statements are based
on current management expectations. Actual results may differ
materially as a result of several factors, including, but not
limited to the following: any adverse impact or disruption to the
Company’s operations; changes in general economic and financial
conditions (including federal monetary policy, interest rate
changes, and inflation); increase in interest rates, inflation, and
margin compression; ability to successfully operate as a broker;
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-servicers; our ability to manage
personnel expenses; our ability to successfully use warehousing
capacity and satisfy financial covenants; our ability to maintain
compliance with the continued listing requirements of the NYSE
American for our common stock; increased competition in the
mortgage lending industry by larger or more efficient companies;
issues and system risks related to our technology; ability to
successfully create cost and product efficiencies through new
technology including cyber risk and data security risk; more than
expected increases in default rates or loss severities and mortgage
related losses; ability to obtain additional financing through
lending and repurchase facilities, debt or equity funding,
strategic relationships or otherwise; the terms of any financing,
whether debt or equity, that we do obtain and our expected use of
proceeds from any financing; increase in loan repurchase requests
and ability to adequately settle repurchase obligations; failure to
create brand awareness; the outcome of any claims we are subject
to, including any settlements of litigation or regulatory actions
pending against us or other legal contingencies; impact on the U.S.
economy and financial markets due to the continued effect 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, see our latest Annual Report on Form
10-K and Quarterly Reports on Form 10-Q we file with the SEC and in
particular the discussion of “Risk Factors” therein. This document
speaks only as of its date and we do not undertake, and expressly
disclaim any obligation, to release publicly the results of any
revisions that may be made to any forward-looking statements to
reflect the occurrence of anticipated or unanticipated events or
circumstances after the date of such statements except as required
by law.
About the Company
Impac Mortgage Holdings, Inc. (IMH or Impac) provides innovative
mortgage lending and real estate solutions that address the
challenges of today’s economic environment. Impac’s operations
include mortgage lending, servicing, portfolio loss mitigation,
real estate services, and the management of the securitized
long-term mortgage portfolio, which includes the residual interests
in securitizations.
For additional information, questions or comments, please call
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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version on businesswire.com: https://www.businesswire.com/news/home/20230308005756/en/
Justin Moisio, Chief Administrative Officer (949) 475-3988
Justin.Moisio@ImpacMail.com
Impac Mortgage (AMEX:IMH)
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Impac Mortgage (AMEX:IMH)
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