Mortgage crisis deepens at Impac, Accredited
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Tue, 18 Sep 2007 14:41:09 GMT |
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By Jonathan StempelNEW YORK (Reuters) - The mortgage lending crisis deepened on Tuesday, as Impac Mortgage Holdings Inc said it will quit most lending activities, while Accredited Home Lenders Holding Co posted a big quarterly loss and said its survival remained in doubt.The announcements came a day after another struggling lender, NovaStar Financial Inc , gave up its real estate investment trust status sooner than expected because it could not pay a $157 million dividend to keep it.Dozens of mortgage lenders have quit the industry this year, including many that have gone bankrupt, amid rising defaults, falling home prices and investor resistance to buy home loans they now consider too risky.Impac said it will stop making "Alt-A" home loans, its main business, citing "market disruptions and illiquidity." Such loans often go to people who cannot document income or assets.The Irvine, California-based company also said it is quitting warehouse and commercial lending, and has fired 144 workers. It doesn't expect to pay its 10 cents per share common stock dividend for at least the rest of the year."Given the severe dislocation of the marketplace, which included unprecedented margin calls, we are left with no other alternative but to downsize our company to better operate and navigate through this difficult and unrelenting environment," Chief Executive Joseph Tomkinson said. He called the credit crisis was the worst in his 25 years in the business.Accredited, which makes subprime loans to people with weaker credit, posted a $260.2 million loss, or $10.29 per share, for the quarter ended March 31, according to a delayed report filed with securities regulators. That compared with a profit of $35.8 million, or $1.61 per share, a year earlier.San Diego-based Accredited said results suffered from a large loss from the sale of mortgage loans.It also said it expects to need further amendments to or waivers of covenants in its credit facilities in 2007. "We cannot assure you that we will continue to operate as a going concern," it said in its quarterly report.Earlier this month, Accredited closed much of its lending operations, eliminating 1,600 of 2,600 jobs.It is suing to force private equity firm Lone Star Funds to complete a $15.10 per share takeover. Accredited has rejected a lowered $8.50 per share offer from Dallas-based Lone Star that valued it at $214 million.In morning trading, Impac shares fell 24 cents, or 13.6 percent, to $1.52, and Accredited fell 38 cents, or 3.7 percent, to $9.90. Kansas, City, Missouri-based NovaStar fell 99 cents, or 12 percent, to $7.25.
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