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Impac Stops Funding Alt-A Loans

Irvine-based Impac Mortgage Holdings Inc. said Tuesday it plans to stop funding loans known as Alt-A a day after rival American Home Mortgage Investment Corp. filed for bankruptcy protection.

Alt-A mortgages are in between the riskiest subprime loans and the best mortgages. They often are made to people who have difficulty documenting income, such as small-business owners.

About 90% of Impac’s mortgages last year were Alt-A.

Impac said it’s making other changes to deal with “current market conditions.”

The company, which holds mortgages as investments, is selling $1 billion of its $1.6 billion in loans that were acquired with borrowed money.

Impac has met all demands by borrowers to get their money back, Chief Executive Joseph R. Tomkinson said.

The company has cut costs in the past three months as it funds fewer mortgages. Impac plans to make more cuts, it said.

“While this is a difficult and painful decision, we believe that it’s a prudent strategy in light of the current business environment,” Tomkinson said.

Impac’s shares, which are down about 85% for the year with a market value of about $95 million, were off another 25% Tuesday.

On Monday, American Home Mortgage Investment of Melville, N.Y., filed for bankruptcy protection after it was unable to meet demands from lenders for their money back.

American Home specialized in Alt-A loans.

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