Impac and Angel Oak focus on non-QM with mixed results



The two players in the non-standard loan market showed mixed results in the second quarter, as product margins grew more attractive than conventional mortgages.

An unqualified Angel Oak Mortgage who went public in June, posted a net profit for the quarter to date of $ 2.2 million and raised $ 395.5 million in new loans. Impac Mortgage Holdings, which provides a blend of non-QC and government-funded corporate loans, posted a second-quarter net loss of $ 8.9 million, up from a reported $ 23 million. a year ago… However, this was more than the loss from first quarter of this year (US $ 683,000) due to changes in valuation and costs associated with the restoration of non-QM activities. Lending to the company without QM jumped to nearly $ 101 million from just under $ 15 million in the previous fiscal period.

Investments in non-QM in the second quarter of this year are in stark contrast to conditions in the same period in 2020. The non-QM market collapsed for a short time due to market disruptions at the time associated with the pandemic, and some players left. the benefit of loans to government-sponsored enterprises. A year later, Q2 earnings show that when it comes to profitability, QM now looks more favorable.

“The business to build … GSE was not immune to the marginal pressure that the industry experienced in the second quarter,” Impac Chairman and CEO George Mangiachina said in a press release, adding that, on the contrary, the company sees “healthy margins »Without QM.

While pressures to diversify into higher-margin loans have been known in the past to have weakened mortgage underwriting to an alarming degree, both companies said in separate income statements that the leeway they had in evaluating nontraditional borrowers was not overwhelming.

“We took an iterative and risk-based approach to updating our credit drawer guidelines in the second quarter to ensure a competitive supply in the market while maintaining … high credit standards,” said Justin Moisio, chief administrative officer of Impac.

“Let me emphasize that our borrowers are as good as loans,” said Angel Oak CEO Robert Williams. “In fact, credit metrics are reliable, including simple to near-best credit scores, an average loan-to-value ratio of 70%, and a low debt-to-income ratio.”

While non-QM loans did grow rapidly at Impac during the quarter, they still represented a relatively small fraction of the roughly $ 600 million received from the company, so this niche may take some time to grow big enough. to take advantage of the efficiency of scale.

Total shipments were down from $ 850 million in the previous fiscal period. The company’s expenses in the second quarter were $ 19.6 million, up nearly $ 14.5 million a year earlier, but less than nearly $ 21.3 million in the first quarter.


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