$6.0 billion 4th quarter production
By MortgageDaily.com staff
2/23/2006

Defying the downward quarterly trend in production, Impac Funding Corp. managed to nudge up annual fundings. But the real estate investment trust doesn't see any improvements on the horizon.

Fourth quarter mortgages acquired and originated totaled $6.0 billion, off about $0.2 billion from the prior quarter and $0.4 billion below the comparable period a year earlier, parent company Impac Mortgage Holdings Inc. announced Tuesday.

Refinance loans reportedly represented about 41 percent of Impac's quarterly volume and adjustable-rate mortgages about 75 percent.

Correspondent acquisitions accounted for about $5.0 billion of fourth quarter production, wholesale and retail originations contributed nearly $0.8 billion and B/C originations represented the remaining $0.3 billion, Impac said.

In all of 2005, Impac originated $22.3 billion of primarily nonconforming Alt-A mortgages, a smidgen above $22.2 billion for 2004 and making the Newport Beach, Calif.-based lender the nation's fourth largest originator, according to the earnings announcement.

Noting that the industry mortgage fundings are expected to decrease by about 20% over 2006, Impac added, "Our goal is to maintain production levels that are flat, or slightly down from 2005."

Fourth quarter earnings plummeted to $25.3 million from the prior quarter's $126.4 million, the announcement said.

Earnings "decreased as the yield on new mortgage loans added to the investment portfolio did not keep pace with the steady increase in borrowing costs," Chairman and Chief Executive Joseph Tomkinson said in the written statement. "Even faced with prepayment penalties, borrowers took advantage of the flat yield curve and competitive mortgage environment by tapping into housing price appreciation to refinance their mortgages.

"As a result, earnings were further affected as we increased the rate at which we amortized loan premiums and securitization costs associated with the mortgages."

Among the steps Impac said it has taken to improve overall financial performance are 'increasing pricing on current mortgage loan production and making the appropriate adjustments to our cost structure to reduce overall expenses," such as leveraging off an existing infrastructure to offer Alt-A wholesale and subprime products under one platform.

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