Two more firms fall prey to US mortgage lending crisis

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.