Strong mortgage originations help Impac sustain its profitability

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Impac Mortgage Holdings generated $1.4 million in net income during the third quarter in earnings that were favorable compared to a string of losses in the past year.

The Irvine, Calif.-based company took a net loss of $45.4 million during the same period a year ago, and recorded $3.9 million in net income during the second quarter. The third quarter marks the second of two consecutive profitable quarters for Impac.

Impac's current-quarter results reflect the net effect of a higher gain-on-sale for its originations, intangible asset and goodwill impairment charges, and lower operating expenses, along with a decline in the value of its mortgage servicing rights.

The company originated $1.6 billion in mortgages with roughly 190 basis points of margin in the third quarter. It generated $900 million in originations with approximately 160 basis points of margin during the same period a year ago. Loans made outside the parameters of the qualified mortgage definition made up 16% of its third-quarter volume. Impac originated the majority of its non-QM loans through third-party origination channels.

Originations that came in through the lower cost consumer-direct channel made up 85% of Impac's total mortgage production in the third quarter, versus 51% during the same period in 2018.

Also during the third quarter, the company was able to reduce its legal fees by $1.3 billion year-over-year because in 2018 it was able to resolve three long-standing litigation matters that date back to the 2008 financial crisis.

Overall operating expenses during the third quarter totaled $25.6 million, which marks a 59% decrease compared to the same period in 2018. Expenses totaled $21.6 million in the second quarter of this year.

Revenue during the third quarter totaled $25.8 million, up from $24.1 million during the second quarter, and $19.4 million during the third quarter of 2018.

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