Impac Mortgage Holdings, Inc. operates as an independent residential mortgage lender which originates, sells and services residential mortgage loans.
The company originates non-qualified mortgages (NonQM), conventional mortgage loans, which are intended to be eligible for sale to the U.S. government-sponsored enterprises (GSEs), including the Federal National Mortgage Association (Fannie Mae), the Federal Home Loan Mortgage Corporation (Freddie Mac) (conventional loans), and government-insured...
Impac Mortgage Holdings, Inc. operates as an independent residential mortgage lender which originates, sells and services residential mortgage loans.
The company originates non-qualified mortgages (NonQM), conventional mortgage loans, which are intended to be eligible for sale to the U.S. government-sponsored enterprises (GSEs), including the Federal National Mortgage Association (Fannie Mae), the Federal Home Loan Mortgage Corporation (Freddie Mac) (conventional loans), and government-insured mortgage loans eligible for government securities issued through the Government National Mortgage Association (Ginnie Mae or government loans).
Segments
The company operates through three segments, Mortgage Lending, Long-Term Mortgage Portfolio and Real Estate Services.
Mortgage Lending segment
The company offers a broad suite of mortgage lending products to consumers through its broker fulfillment model, including conventional, government, and alternative credit products. Through this model, the company has access to an expanded product offering to include more innovative products than previously available to meet the needs of borrowers who may not be served by traditional conventional and government products. The company's broker fulfillment model generates origination fees and broker fee income, net of origination costs.
Non-QM loans are loans that do not meet the qualified mortgage (QM) guidelines set out by the Consumer Financial Protection Bureau (CFPB). While there is an underserved mortgage market for these consumers, such as self-employed borrowers, the addressable Non-QM market has retracted significantly from the prior year due to rate and credit changes in the market. Under the broker fulfillment model, the company has engaged with a number of lenders who are able to offer competitive Non-QM products that serve the needs of its borrowers.
The company reserves an opportunistic approach with respect to originating Federal Housing Administration (FHA) and Veterans Affairs (VA) loans as a direct lender, as well as holding the mortgage servicing rights of these Ginnie Mae securitizable loans. The company has participated in Ginnie Mae securitizations in the past, and maintain its Housing and Urban Development (HUD), VA, and Ginnie Mae designations in good standing.
The company maintains its licensing status and ability to lend directly as a nationwide mortgage lender. The broker fulfillment model allows the company to originate loans eligible for sale to Fannie Mae and Freddie Mac, NonQM and Jumbo mortgages and loans eligible for government insurance (government loans) by the FHA, VA, and the United States Department of Agriculture (USDA), as well as second lien products. The company originates mortgages through its wholly-owned subsidiary, Impac Mortgage Corp. (IMC), under which its retail channel, CCM, is situated.
During 2022, the company's Mortgage Lending segment provided mortgage lending products through two lending channels, retail and wholesale and opportunistically retained mortgage servicing rights. In 2023, the company shifted to deliver the same products through a mortgage broker model. The company's Long-Term Mortgage Portfolio consisted of residual interests in securitization trusts, prior to the sale during the first quarter of 2022.
The company's origination channels, Retail and Wholesale, produce similar mortgage loan products and apply similar underwriting standards.
Retail
Prior to the repositioning to a mortgage broker, the company's call center based retail channel utilized a high-volume, rapid response time funding model with a focus on providing exceptional customer service. The centralized retail call center was a compliment to IMC's business-to-business origination channel and provided additional capacity to process increased origination volumes of expanded products, including its NonQM loan programs and government insured Ginnie Mae programs, while having the ability to generate servicing assets for IMC.
When retail loans were originated, the origination documentation was completed inclusive of customer disclosures and other aspects of the lending process and funding of the transaction was completed internally. The company's call center representatives contacted borrowers through either inbound or outbound marketing campaigns sourced from its digital marketing campaigns, TV and radio ads, purchase-money and refinance mortgage leads, including leads sourced from customer referrals and retention of customers in the servicing portfolio that are seeking to refinance or purchase a property.
During the fourth quarter of 2022 and first quarter of 2023, the company repositioned its retail consumer direct channel, CashCall Mortgage (CCM) to be a mortgage broker rather than a direct lender.
Wholesale
In a wholesale transaction, the company's account executives worked directly with mortgage brokers who originated and document loans for delivery to its operational center where it underwrote and funded the mortgage loan. Each loan was underwritten to the company's underwriting standards and, if approved, the borrower was sent new disclosures under its name and the loan was funded in the name of IMC.
The company also obtained a third-party due diligence report for each prospective broker that verifies licensing and provided information on any industry sanctions that might exist. In addition, each mortgage broker was required to sign its broker agreement that contains certain representations and warranties from the brokers.
During the first quarter of 2023, the company decided to wind down operations in the Wholesale Channel due to significantly diminished volume as a result of volatility in the market around rates and credit risk.
Since 2011, the company had provided loans to customers predominantly in the Western U.S. with California, Arizona, Nevada and Washington comprising 69% of originations in 2022.
Loan Types
The company's loan products primarily include conventional loans intended to be eligible for sale to Fannie Mae and Freddie Mac and loans eligible for government insurance by FHA, VA and USDA (the Agencies), NonQM and Jumbo. The FHA, VA and USDA loans are government-insured loans eligible for Ginnie Mae securities issuance. Prior to the wind down of the company's wholesale channel and its repositioning to a mortgage broker, it established strict lending guidelines, including determining the prospective borrowers' ability to repay the mortgage, which would keep delinquencies and foreclosures at acceptable levels. The company had traditionally evaluated its guidelines to expand its reach to the underserved market of credit worthy borrowers who can fully document and substantiate an ability to repay mortgage loans, but unable to obtain financing through traditional programs, for example self-employed borrowers. In conjunction with establishing strict lending guidelines, the company had also established investor relationships which provided it with an exit strategy for these NonQM loans.
Loan Sales-Selling Loans to GSEs, Issuing Ginnie Mae Securities and Selling Loans on a Whole Loan Basis
The company has sold its conventional, jumbo and NonQM loans on a servicing released whole loan basis to private investors and issue securities through Ginnie Mae for its government insured product. The company securitized government-insured loans by issuing Ginnie Mae securities through a process whereby a pool of loans was transferred to Ginnie Mae as collateral for a government-insured mortgage-backed security. As of December 31, 2022, the company selectively retained mortgage servicing, as well as increase whole loan sales on a servicing released basis to investors. The largest five investors accounted for 75% of the company's servicing released loan sales for the year ended December 31, 2022.
Mortgage Servicing
Upon the company's sale of loans to GSEs or the issuance of securities through Ginnie Mae, it retains the mortgage servicing rights with respect to the mortgage loans. The company also sells loans on a servicing-released basis to secondary market investors where it does not retain the servicing rights. The company may also be entitled to receive additional servicing compensation, such as late payment fees and earn additional income through the use of non-interest bearing escrows. As a mortgage servicer, the company is required to advance certain amounts to meet the contractual loan servicing requirements for certain investors. The company may advance principal, interest, property taxes and insurance for borrowers that have become delinquent, plus any other costs to preserve the property. Also, the company will advance funds to maintain, repair and market foreclosed real estate properties. Such advances are typically repaid when the loan becomes current or repaid from the proceeds generated from the sale of the property subsequent to foreclosure.
The company has hired a nationally recognized residential servicer to sub-service the servicing portfolio. Although the company uses a sub-servicer to provide primary servicing and certain default servicing functions, its servicing surveillance team, which is experienced in loss mitigation and real estate recovery, monitors and surveys the performance of the loans and sub-servicer.
Long-Term Mortgage Portfolio segment
In March 2022, the company sold its residual interest certificates and assigned certain optional termination and loan purchase rights relating to 37 securitizations that closed between 2000 and 2007, which entailed the entire legacy securitization portfolio within its Long-Term Mortgage Portfolio.
The Long-Term Mortgage Portfolio consisted of the company's residual interests in securitizations. The Long-Term Mortgage Portfolio included adjustable rate and, to a lesser extent, fixed rate Alt-A single-family residential mortgages and commercial (primarily multifamily residential loans) mortgages that were acquired and originated primarily by the company's discontinued, prior non-conforming mortgage lending operations and retained in its long-term portfolio before 2008. Alt-A mortgages are primarily first lien mortgages made to borrowers whose credit was generally within established Fannie Mae and Freddie Mac guidelines at origination date but have loan characteristics that make them non-conforming under those guidelines.
Master Servicing
Until 2007, the company was retained master servicing rights on substantially all of its non-conforming single-family residential and commercial mortgage acquisitions and originations that were sold through securitizations. Since 2008, the company has not retained any additional master servicing rights, but has continued to be the master servicer of previously retained master servicing rights.
The function of a master servicer includes collecting loan payments from loan servicers and remitting loan payments, less master servicing fees receivable and other fees, to a trustee or other purchaser for each series of mortgage-backed securities or mortgages master serviced. In addition, as master servicer, the company monitors compliance with the servicing guidelines and perform or contract with third parties to perform all functions not adequately performed by any loan servicer. The master servicer is also required to advance funds, or cause the loan servicers to advance funds, to cover principal and interest payments not received from borrowers depending on the status of their mortgages, but only to the extent that it is determined that such advances are recoverable either from the borrower or from the liquidation of the property.
During the first quarter of 2022, the company sold the legacy securitization portfolio, however it will remain as the master servicer with respect to all of the securitizations until such time that the deals are collapsed, payoff or the master servicing rights are sold.
Real Estate Services segment
This segment performs master servicing and provides loss mitigation services for primarily its securitized long-term mortgage portfolio. This segment provides solutions to the distressed mortgage and real estate markets.
The company provides loss mitigation and real estate services primarily on its own long-term mortgage portfolio, including default surveillance, loan modification services, short sale services (where a lender agrees to take less than the balance owed from the borrower), REO surveillance and disposition services and monitoring, reconciling and reporting services for residential and multifamily mortgage portfolios. In March 2022, the company sold its residual interest certificates, and assigned certain optional termination and loan purchase rights which entails the entire legacy securitization portfolio within its long-term mortgage portfolio.
Regulation
The laws and regulations that the company is subject to include the Bank Secrecy Act and the USA PATRIOT Act, as well as related regulations issued by the U.S. Department of the Treasury and federal banking regulators (collectively, AML laws); the Federal Truth-in-Lending Act (known as TILA) and Regulation Z promulgated thereunder; the Equal Credit Opportunity Act and Regulation B promulgated thereunder; the Fair Housing Act; the Fair Credit Reporting Act; the Fair and Accurate Credit Transaction Act; the Gramm-Leach-Bliley Act; the California Consumer Privacy Act; the Real Estate Settlement Procedures Act (known as RESPA) and Regulation X promulgated thereunder; the Home Mortgage Disclosure Act (known as HMDA) and Regulation C promulgated thereunder; the Telephone Consumer Protection Act and the CAN-SPAM Act; the Depository Institutions Deregulation and Monetary Control Act of 1980; the Alternative Mortgage Transaction Parity Act of 1982; the Fair Debt Collection Practices Act; the Secure and Fair Enforcement for Mortgage Licensing Act of 2008; regulations promulgated by the CFPB to help assure that consumers are provided with timely and understandable information about residential mortgage loans that protect them against Unfair, Deceptive or Abusive Acts or Practices; interagency final rules required pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank); and the Secure and Fair Enforcement for Mortgage Licensing Act, commonly known as the SAFE Act.
History
Impac Mortgage Holdings, Inc., a Maryland corporation, was founded in 1995. The company was incorporated in 1995.
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