Impac Mortgage Reports $13.5 Million Loss In Second Quarter. Company Blames Lack Of Housing Inventory

Another mortgage lender is reporting taking a hit in their profit margins. Add Impac Mortgage Holdings to the list of mortgage lenders that posted a loss in the second quarter of 2022, 

As a result, Impac have opted to break with the company’s origins and pull away from non-QM products. Impac only made less than $500,00 in revenue from non-QM products in the second quarter. 

Impac Mortgage on Thursday reported a $13.5 million loss in the second quarter. This is also in addition to the $1.2 million loss in the first quarter of 2022. The company also lost $8.9 million loss in second quarter of 2021.

Impac blames a lack of housing inventory and an increase in rates impacted borrowers’ affordability. In addition, credit spreads increased due to surging rates. This resulted in an oversupply of low coupon originations. Thus, this reduced margins and diminished capital market exits for originators. 

Breakdown Of Impac Mortgage Holdings’ Ugly Losses

Impac’s originations declined from $622.5 million in the second quarter of 2021. This is in addition to $482 million in the first quarter of 2022 and $128 million and the 2nd quarter of 2022. The company’s gain-on-sale margins decreased from 175 basis points from April to June 2021 to 14 bps in the same period this year. 

Meanwhile, non-QM originations fell to $80.2 million in the second quarter of 2022. This is down from $314.3 million in Q1 2022 and $100.6 million in Q2 2021.  

Impac Mortgage Holdings CEO George Mangiaracina added:

In the second quarter of 2022, we reduced our marketing spend as we pulled back on our origination volumes to mitigate the aforementioned risks associated with the current environment.

Consequently, Impac’s revenue fell to $495,000 in the second quarter. This is from $7.2 million in the prior quarter and $10.9 million a year ago. 

Impac’s expenses came in at $14.6 million in the second quarter of 2022. This is down from $19.3 million in the previous quarter. In addition, this is down from $19.6 million in the same period of 2021. The company also stated the decline in expenses was due to a reduction in variable compensation and in the headcount. This also had the consequence of lower origination volume. The company has cut headcount by 30% over the last year.

Impac’s servicing portfolio decreased to $71.4 million on June 30, 2022. This is compared to $71.8 million on December 31, 2021 and $48.6 million on June 30, 2021. Impac continues to sell whole loans and selectively retains Ginnie Mae mortgage servicing rights.

Also, This Article Originally Appeared On Lender Meltdown.

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