labels: housing finance
Two more firms fall prey to US mortgage lending crisisnews
20 September 2007

Mumbai: Two more US firms quit mortgage lending business amidst a deepening of the subprime mortgage lending crisis.

Impac Mortgage Holdings Inc said it would quit most lending and cancel its dividend, while Accredited Home Lenders Holding Co posted a big quarterly loss and said its survival remained in doubt.

The developments 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.
Irvine, California-based Impac said it has fired 144 workers and will stop making "Alt-A" home loans, its main business, citing "market disruptions and illiquidity."

The company also said it is quitting warehouse and commercial lending, and will keep only a small number of offices that make loans eligible for purchase by Fannie Mae and Freddie Mac. It doesn''t expect to pay its 10 cents per share quarterly dividend at least through year-end.

Impac also said it has sold $900 million of mortgages since August 1, but has found it "extremely difficult" to sell more, and is working with its own lenders to find ways to do so.

San Diego-based Accredited, which makes subprime loans to people with weaker credit, posted a loss of $260.2 million, 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.

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 had made $15.8 billion of home loans last year.

Accredited is suing to force private equity firm Lone Star Funds to complete a $15.10 per share takeover announced in June.

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Two more firms fall prey to US mortgage lending crisis