Impac Mortgage board discontinues operations; facilities terminated amid defaults

By Caroline Salls

Pittsburgh, Nov. 13 - Impac Mortgage Holdings, Inc.'s board of directors has discontinued the company's mortgage, commercial and warehouse lender operations in light of the deterioration in the secondary closed mortgage loans market, according to an 8-K filed Tuesday with the Securities and Exchange Commission.

The company said it estimates that it will incur a $17 million pre-tax restructuring charge, consisting of $5 million in lease termination costs and $12 million in fixed asset impairment charges.

Also, Impac's $286 million credit facility has been liquidated after Bear Stearns Funding Inc. demanded full payment of the facility and seized the collateral.

According to the filing, Impac received a notice of default on the facility from Bear Stearns Funding on Sept. 12 in connection with margin calls.

As a result of the liquidation, Impac no longer has margin call or loss exposure under the facility.

Impac said it also lost margin call and loss exposure on its $404 million of reverse repurchase facilities with Washington Mutual Bank and Natixis Real Estate Capital Inc. after the facilities were terminated and the loans were sold to the respective lenders.

The company said it was in technical default on the Washington Mutual and Natixis facilities because it was not in compliance with some financial covenants.

In addition, Impac has requested a default waiver in connection with its UBS Real Estate Securities, Inc. reverse repurchase agreement and its Colonial Bank warehouse facility, which had an outstanding balance of $407 million as of Sept. 30.

The company said the default on these facilities stemmed from violation of some income and tangible net worth covenants.

Impac Mortgage Holdings is a mortgage real estate investment trust based in Irvine, Calif.

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