US: Credit Market

Impac Exits Alt-A Market, Cuts 144 Jobs


Mortgage lender Impac said it is cutting 144 jobs and completely exiting the alt-A lending market as the mortgage landscape continues to deteriorate.

Nearly all loans Impac originated before the market troubles began were alt-A mortgages. Alt-A mortgages are loans given to customers with minor credit problems or who are unable to fully document their income and assets like a traditional, prime borrower.

Additionally, Impac , will no longer provide warehouse or commercial lending, leaving the company with only a small conforming lending business and servicing operation.

Impac also said it does not expect to pay any dividends to common shareholders for the remainder of the year, citing prior operating losses and expected third-quarter operating losses from the sale or disposition of mortgage loans and securities.

As delinquencies and defaults among mortgages increased in recent months, investors stopped purchasing nearly all mortgages on the secondary market.

Mortgage lenders rely on secondary markets to either sell mortgages or borrow money to make future loans. Without the funding from the secondary markets, lenders often have minimal cash to continue operating.

About the only loans still holding value in the secondary market are "conforming" loans, mortgages that government-sponsored entities Fannie Mae and Freddie Mac are willing to purchase.

Impac reaffirmed its payment off series B and C preferred stock dividends payable Sept. 28 to shareholders of record on Sept. 4.