Shares of Irvine-based Impac Mortgage Holdings Inc. were down nearly 20% Friday as investors weighed in with concerns about the company’s future after it report a staggering net loss a day earlier.
On Thursday, Impac, which acquires mortgages as investments and had made home loans itself before quitting that business in the third quarter, reported a net loss of $1.2 billion on Thursday.
The loss is massive given Impac’s interest income of $313.8 million for the quarter and its recent market value of about $45 million.
Impac said it “continues to pay its obligations” but “the ability of the company to continue is dependent upon many factors.”
A key factor is the declining value of loans Impac holds.
Impac’s third-quarter loss included a $628 million increase in provision for losses on loans it owns, a further sign of the deterioration in the housing and mortgage markets. It also included a $161 million loss from its discontinued operations.
The company primarily invests in Alt-A mortgages, which are in between those for borrowers with good credit and the riskiest subprime loans.
Ratings agency Standard & Poor’s said on Thursday that Impac’s $6.6 billion 2006 Alt-A loans are 8.3% delinquent, making it one of the three worst-performing securities backed by Alt-A mortgages.
The average delinquency rate for Alt-A loans is now about 4.6%, S & P; said.
