Impac Delinquency Doubles

The real estate investment trust’s 60+ day delinquency jumped to 6.24 percent at the end of 2006 from 3.12 percent a year earlier, according to a 10-K filing with the Securities and Exchange Commission today.

Impac, which restated income for 2004 and 2005, reported a $75.3 million loss for last year versus a $270.3 million profit in 2005.

The Newport Beach, Calif.-based company, which announced $11.6 billion in 2006 production, said 99 percent of last year’s originations were Alt-A, 73 percent were hybrid adjustable-rate mortgages and 72 percent were interest-only. The weighted average original credit score was 697 and the weighted average original loan-to-value was 72 percent.

“A majority of our mortgage acquisitions and originations, long-term mortgage portfolio and finance receivables are secured by properties in California and, to a lesser extent, Florida,” the filing indicated.

Impac, which recently issued a seven-point announcement highlighting how it is not subprime, said tighter underwriting guidelines pushed last year’s production down more than $10 billion from 2005.

Dozens of ongoing risks were laid out in the SEC filing, including the threat of competition from Fannie and Freddie who have “a size and cost-of-funds advantage over us that allows them to price mortgages at lower rates than we are able to offer.”

“This phenomenon may seriously destabilize the Alt-A mortgage industry,” Impac noted.

Additional risks it faces reportedly include the devastating effects that would arise from being forced to sell mortgages on a whole-loan basis, the effect of the current subprime meltdown on the Alt-A market and the continued availability of financing.

Impac, which reported 827 employees as of Dec. 31, outlined the following pending lawsuits in the report:

• On June 27, 2000, a complaint captioned Michael P. and Shellie Gilmor v. Preferred Credit Corp. and Impac Funding Corp., et al. was filed in the Circuit Court for Clay County, Mo., as a purported class action lawsuit alleging that the defendants violated Missouri’s Second Loans Act and Merchandising Practices Act. In July 2001, the Missouri complaint was amended to include IMH and other Impac-related entities. A plaintiffs class was certified on January 2, 2003. On June 22, 2004, the court issued an order to stay all proceedings pending the outcome of an appeal in a similar case in the Eighth Circuit.

• On Feb. 3, 2004, a complaint captioned James and Jill Baker v. Century Financial Group Inc, et al was filed in the Circuit Court of Clay County, Mo., as a purported class action lawsuit alleging that the defendants violated Missouri’s Second Loan Act and Merchandising Practices Act.

• On Oct. 2, 2001, a complaint captioned Deborah Searcy, Shirley Walker, et al. v. Impac Funding Corp., Impac Mortgage Holdings Inc. et. al. was filed in the Wayne County Circuit Court, State of Michigan, as a purported class action lawsuit alleging that the defendants violated Michigan’s Secondary Mortgage Loan Act, Credit Reform Act and Consumer Protection Act. A motion to dismiss an amended complaint has been filed, but not yet ruled upon.

• On July 31, 2003, a purported class action complaint captioned Frazier, et al v. Impac Funding Corp., et al, was filed in federal court in Tennessee. The causes of action in the action allege violations of Tennessee’s usury statute and Consumer Protection Act. A motion to dismiss the complaint was filed and not yet ruled upon. The court agreed to administratively close the case on April 5, 2004 pending an appeal in a similar case. On April 29, 2004, the court issued its order administratively closing the case.

• On Nov. 25, 2003, a complaint captioned Michael and Amber Stallings v. Empire Funding Home Loan Owner Trust 1997-3; U.S. Bank, National Association; and Wilmington Trust Co. was filed in the U.S. District Court for the Western District of Tennessee, as a purported class action lawsuit alleging that the defendants violated Tennessee predatory lending laws governing second mortgage loans. The complaint further alleged that certain assignees of mortgage loans, including two Impac-related trusts, should be included as defendants in the lawsuit. Like the Frazier matter this case was administratively closed on April 29, 2004, pending an appeal in a similar case.

“All of the above purported class action lawsuits are similar in nature in that they allege that the mortgage loan originators violated the respective state’s statutes by charging excessive fees and costs when making second mortgage loans on residential real estate,” Impac said.