Impac Looks to Service for Fannie/Freddie

IRVINE, CA-Impac Mortgage Holdings here, a lender once synonymous with losing money and alt-A lending, has emerged from the "pink sheets" and is now waiting on final approvals to become a Fannie Mae and Freddie Mac seller/servicer.

A nonbank that was formerly a real estate investment trust, it has been approved to originate FHA loans. Today, all of its production is retail-based compared to its past life as a correspondent and wholesale funder.

The lender, however, declined to disclose any information about its originations, including the current run-rate. (It also is in the loan modification business and is contemplating becoming a warehouse provider.)

Company CEO Joe Tomkinson, a mortgage banker for several decades, seems satisfied with Impac's results. It earned a small profit in the third quarter and appears - to some degree - to be living off the cash flow generated from its $5.7 billion MBS portfolio. (It also serves as master servicer on $16 billion in loans securitized when it was a REIT.)

"Back in 2007 I said I would spend two years repairing everything," Mr. Tomkinson said in an interview. "We've cleaned up our balance sheet and posted a profit in the third quarter."

According to a recent SEC filing, Impac has been purchasing its own preferred stock at a deep discount. It also has renegotiated its bank lines on existing reverse repurchase agreements. Because of all the money it lost the past few years, it has millions of dollars in "net operating loss carry-forwards," which can be used to reduce its tax payments. (At yearend 2008, the federal NOL was $627 million.)

Besides lending and loan modifications, Impac also is involved in related businesses, including real estate dispositions, asset surveillance, escrow services and real estate brokerage. However, most of these are tied to its mortgage asset portfolio and the company notes, "there remains uncertainty about their future success, including the ability to provide similar services to the marketplace."

Meanwhile, not only are its shares trading on the AMEX, but they've run up in value, climbing to $6 recently from $3 in mid-December, just about the time it left the OTC market.

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