It focused on rebuilding its non-QM platform through its TPO channel during Q1
Irvine-based Impac Mortgage Holdings has reported that despite the impact of the pandemic, its losses were offset by the $14.7 million of loan originations its non-QM lending business generated in the first quarter of 2021.
Impac's net loss decreased to $683,000 for the period, down from $64.7 million in Q1 2020. The mortgage banking firm said that the "remarking" of its non-QM" operations played a huge part in bringing down its losses.
"We re-engaged lending in the non-QM market during the fourth quarter of 2020 and have continued throughout the first quarter of 2021 to rebuild our third-party origination (TPO) non-QM origination team in anticipation of increasing mortgage interest rates and declining conventional margins in the second half of 2021," Impac said in a statement. "With the sudden increase in mortgage interest rates and subsequent margin compression seen in conventional originations during February and March, we have accelerated our pivot to non-QM in our TPO channel."
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Consequently, its gain on sale margins increased to 237 bps for the three months ended March 31, 2021, compared to 187 bps during the same period in 2020. Total originations were up to $849.9 million from $810 million in the previous quarter, but down from its $1.5 billion origination volume in the first quarter of 2020.
Impac's non-QM origination volumes jumped to $14.7 million from just $2.2 million in Q4 2020. Year over year, it was way below the Q1 2020 volume of $261.6 million. The firm started rebuilding its non-QM platform in the fourth quarter of 2020.
"The first quarter of 2021 was primarily focused on building and ramping up our non-QM platform, specifically through our TPO channel. While we do not provide forward guidance, we will note that during April 2021, our non-QM origination volume was more than double our non-QM origination volume for the entire first quarter of 2021," Impac CEO and Chairman George Mangiaracina said, "We continue to invest in resources that will enable us to further grow alternative credit, which has historically been one of our core competences, and which we believe has a permanent and increasingly important place in the market."
