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News Article | May 4, 2017
Site: www.businesswire.com

WESTLAKE VILLAGE, Calif.--(BUSINESS WIRE)--PennyMac Financial Services, Inc. (NYSE: PFSI) today reported net income of $54.4 million for the first quarter of 2017, on revenue of $204.5 million. Net income attributable to PFSI common stockholders was $10.9 million, or $0.47 per diluted share. Book value per share increased to $16.01, up from $15.49 at December 31, 2016. “PennyMac Financial’s first quarter results reflect the combination of an abrupt rise in mortgage rates at the end of last year and the typical seasonal slowdown in origination volumes,” said President and Chief Executive Officer David Spector. “With respect to mortgage rates, we have recently seen a decline in rates that is expected to improve the second quarter’s mortgage origination outlook. As it pertains to seasonality, strong pending home sales bode well for home buying activity this spring and summer. Looking beyond the next quarter, we continue to invest in PennyMac’s unique operating platform, which we believe will enable us to thrive in a variety of different market conditions.” The following table presents the contribution of PennyMac Financial’s Production, Servicing and Investment Management segments to pretax income: Production includes the correspondent acquisition of newly originated government-insured mortgage loans for PennyMac Financial’s own account, fulfillment services on behalf of PennyMac Mortgage Investment Trust (NYSE: PMT) and consumer direct lending. PennyMac Financial’s loan production activity totaled $14.9 billion in UPB, of which $10.3 billion in UPB was for its own account, and $4.6 billion was fee-based fulfillment activity for PMT. IRLCs on correspondent government and consumer direct loans totaled $11.1 billion in UPB. Production segment pretax income was $47.5 million, a decrease of 49 percent from the prior quarter and a decrease of 31 percent from the first quarter of 2016. Production revenue totaled $110.0 million, a decrease of 37 percent from the prior quarter and a decrease of 6 percent from the first quarter of 2016. The quarter-over-quarter decrease primarily resulted from a 39 percent quarter-over-quarter decrease in net gains on mortgage loans held for sale, reflecting lower lock volumes and margins in both the correspondent and consumer direct channels. The components of net gains on mortgage loans held for sale are detailed in the following table: PennyMac Financial performs fulfillment services for conventional conforming and jumbo loans acquired by PMT in its correspondent production business. These services include, but are not limited to: marketing; relationship management; the approval of correspondent sellers and the ongoing monitoring of their performance; reviewing loan data, documentation and appraisals to assess loan quality and risk; pricing; hedging and activities related to the subsequent sale and securitization of loans in the secondary mortgage markets for PMT. Fees earned from fulfillment of correspondent loans on behalf of PMT totaled $16.6 million in the first quarter, down 39 percent from $27.2 million in the prior quarter and up 28 percent from $12.9 million in the first quarter of 2016. The quarter-over-quarter decline in fulfillment fee revenue was driven by a decrease in acquisition volumes by PMT. The weighted average fulfillment fee rate was 36 basis points, unchanged from the prior quarter. Production segment expenses were $62.5 million, a 23 percent decrease from the prior quarter and a 28 percent increase from the first quarter of 2016. Servicing includes income from owned MSRs, in addition to subservicing and special servicing activities. Servicing segment pretax income was $13.4 million compared with $35.1 million in the prior quarter and a pretax loss of $39.5 million in the first quarter of 2016. Servicing segment revenues totaled $89.0 million, an 18 percent decrease from the prior quarter and a 6 percent decrease from the first quarter of 2016. The quarter-over-quarter decrease was primarily due to a decrease in net loan servicing fees. Net loan servicing fees totaled $74.2 million and included $129.3 million in servicing fees reduced by $48.5 million of amortization and realization of MSR cash flows. Amortization and realization of MSR cash flows decreased 3 percent from the prior quarter, driven by reduced projected prepayment activity. Net loan servicing fees also included $12.7 million in MSR fair value gains and recovery of impairment for MSRs carried at lower of amortized cost or fair value, primarily reflecting expectations for lower prepayment activity in the future and improvements in the delinquency profile. In addition, net loan servicing fees included $22.2 million in hedging losses and a gain of $2.8 million due to the change in fair value of the ESS liability. The following table presents a breakdown of net loan servicing fees: Servicing segment revenue also included $24.1 million in net gains on mortgage loans held for sale from the securitization of reperforming government-insured and guaranteed loans, compared with $24.5 million in the prior quarter and $13.3 million in the first quarter of 2016. These loans were previously purchased out of Ginnie Mae securitizations (EBOs) and brought back to performing status through PennyMac Financial’s successful servicing efforts, primarily with the use of loan modifications. Servicing segment expenses totaled $75.6 million, a 4 percent increase from the prior quarter and a 28 percent increase from the first quarter of 2016. The quarter-over-quarter increase was in line with growth of the servicing portfolio, primarily driven by increased allocation of compensation expense to the segment and higher technology costs. Interest expense also increased as a result of the term note issuance, which generated proceeds to support revenue growth opportunities, including MSR acquisitions and EBO transactions. The increased interest expense was partially offset by $4 million of interest income from EBO loans. The total servicing portfolio reached $202.9 billion in UPB at March 31, 2017, an increase of 4 percent from the prior quarter end and 23 percent year-over-year. Of the total servicing portfolio, prime servicing was $200.6 billion in UPB and special servicing was $2.3 billion in UPB. PennyMac Financial subservices and conducts special servicing for $63.5 billion in UPB, an increase of 4 percent from December 31, 2016. PennyMac Financial’s owned MSR portfolio grew to $135.3 billion in UPB, an increase of 5 percent from the prior quarter end. PennyMac Financial manages PMT and two private Investment Funds for which it earns base management fees and may earn incentive compensation. Net assets under management were $1.6 billion as of March 31, 2017, up modestly from $1.5 billion at December 31, 2016, and down 4 percent from $1.6 billion at March 31, 2016. Pretax income for the Investment Management segment was $1.1 million compared with $0.4 million in the prior quarter and $1.1 million in the first quarter of 2016. Management fees, which include base management fees from PMT and the private Investment Funds, as well as any earned incentive fees from PMT, decreased 4 percent from the prior quarter and 9 percent from the first quarter of 2016. The following table presents a breakdown of management fees and carried interest: Investment Management segment expenses totaled $4.3 million, a 19 percent decrease from the prior quarter and the first quarter of 2016, driven by a refinement in the methodology for allocating expenses across segments. Total expenses for the first quarter were $142.4 million, an 11 percent decrease from the prior quarter and a 26 percent increase from the first quarter of 2016. The quarter-over-quarter decrease in total expenses was largely due to a $9.3 million decrease in compensation expense attributable to lower incentive-based compensation accruals and reduced headcount to align with the current production market, in addition to lower loan origination expense resulting from the decline in loan production volumes. “The current environment reflects our view coming into the first quarter that the mortgage market is transitioning from a period of historically elevated margins to a period of more normal margins,” concluded Executive Chairman Stanford L. Kurland. “We have consistently demonstrated an ability to operate through market volatility of various kinds and continue to invest in initiatives that we believe will drive long-term growth for our company. These include our consumer direct production channel, non-delegated correspondent, the future launch of our wholesale mortgage origination platform and the completion of our structure to expand financing for our largest asset, our Ginnie Mae mortgage servicing rights. We are confident that such investments and innovations will help ensure our company’s long-term financial and operational success.” Management’s slide presentation will be available in the Investor Relations section of the Company’s website at www.ir.pennymacfinancial.com beginning at 1:30 p.m. (Pacific Daylight Time) on Thursday, May 4, 2017. About PennyMac Financial Services, Inc. PennyMac Financial Services, Inc. is a specialty financial services firm with a comprehensive mortgage platform and integrated business focused on the production and servicing of U.S. mortgage loans and the management of investments related to the U.S. mortgage market. PennyMac Financial Services, Inc. trades on the New York Stock Exchange under the symbol “PFSI.” Additional information about PennyMac Financial Services, Inc. is available at www.ir.pennymacfinancial.com. 1 Excludes changes in the fair value of MSRs, the ESS liability, and gains/(losses) on hedging derivatives which were $12.7 million, $2.8 million, and $(22.2) million, respectively, and provision for credit losses on active loans of $2.2 million in the first quarter. This press release contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, regarding management’s beliefs, estimates, projections and assumptions with respect to, among other things, the Company’s financial results, future operations, business plans and investment strategies, as well as industry and market conditions, all of which are subject to change. Words like “believe,” “expect,” “anticipate,” “promise,” “plan,” and other expressions or words of similar meanings, as well as future or conditional verbs such as “will,” “would,” “should,” “could,” or “may” are generally intended to identify forward-looking statements. Actual results and operations for any future period may vary materially from those projected herein and from past results discussed herein. Factors which could cause actual results to differ materially from historical results or those anticipated include, but are not limited to: the continually changing federal, state and local laws and regulations applicable to the highly regulated industry in which we operate; lawsuits or governmental actions that may result from any noncompliance with the laws and regulations applicable to our businesses; the mortgage lending and servicing-related regulations promulgated by the Consumer Financial Protection Bureau and its enforcement of these regulations; our dependence on U.S. government-sponsored entities and changes in their current roles or their guarantees or guidelines; changes to government mortgage modification programs; the licensing and operational requirements of states and other jurisdictions applicable to the Company’s businesses, to which our bank competitors are not subject; foreclosure delays and changes in foreclosure practices; certain banking regulations that may limit our business activities; our dependence on the multifamily and commercial real estate sectors for future originations of commercial mortgage loans and other commercial real estate related loans; changes in macroeconomic and U.S. real estate market conditions; difficulties inherent in growing loan production volume; difficulties inherent in adjusting the size of our operations to reflect changes in business levels; purchase opportunities for mortgage servicing rights and our success in winning bids; changes in prevailing interest rates; increases in loan delinquencies and defaults; our reliance on PennyMac Mortgage Investment Trust (NYSE: PMT) as a significant source of financing for, and revenue related to, our mortgage banking business; any required additional capital and liquidity to support business growth that may not be available on acceptable terms, if at all; our obligation to indemnify third-party purchasers or repurchase loans if loans that we originate, acquire, service or assist in the fulfillment of, fail to meet certain criteria or characteristics or under other circumstances; our obligation to indemnify PMT and the Investment Funds if its services fail to meet certain criteria or characteristics or under other circumstances; decreases in the returns on the assets that we select and manage for our clients, and our resulting management and incentive fees; the extensive amount of regulation applicable to our investment management segment; conflicts of interest in allocating our services and investment opportunities among us and our advised entities; the effect of public opinion on our reputation; our recent growth; our ability to effectively identify, manage, monitor and mitigate financial risks; our initiation of new business activities or expansion of existing business activities; our ability to detect misconduct and fraud; and our ability to mitigate cybersecurity risks and cyber incidents. You should not place undue reliance on any forward-looking statement and should consider all of the uncertainties and risks described above, as well as those more fully discussed in reports and other documents filed by the Company with the Securities and Exchange Commission from time to time. The Company undertakes no obligation to publicly update or revise any forward-looking statements or any other information contained herein, and the statements made in this press release are current as of the date of this release only.


News Article | May 4, 2017
Site: www.businesswire.com

WESTLAKE VILLAGE, Calif.--(BUSINESS WIRE)--PennyMac Mortgage Investment Trust (NYSE: PMT) today reported net income of $28.7 million, or $0.40 per common share on a diluted basis, for the first quarter of 2017, on net investment income of $64.5 million. PMT previously announced a cash dividend for the first quarter of 2017 of $0.47 per common share of beneficial interest, which was declared on March 27, 2017, and paid on April 27, 2017. “PMT’s investments delivered mixed results in a challenging market environment during the first quarter,” said President and Chief Executive Officer David Spector. “Our earnings were driven by significant gains in our unique GSE credit risk transfer investments, as well as strong contributions from our correspondent production segment. Results from our distressed loan investments showed modest improvement from the prior quarter, but returns remained below our expectations. Our interest rate sensitive strategies also underperformed, primarily due to volatility in the quarter that increased the expense of our interest rate hedges. We believe that this quarter’s results validate our plan to transition PMT’s balance sheet to correspondent-related investments such as CRT and mortgage servicing rights.” The following table presents the contributions of PMT’s segments, consisting of Credit Sensitive Strategies, Interest Rate Sensitive Strategies, Correspondent Production and Corporate. The Credit Sensitive Strategies segment includes results from distressed mortgage loans, CRT, non-Agency subordinated bonds and multifamily commercial real estate investments. Pretax income for the segment was $19.4 million on revenues of $25.8 million, compared with pretax income of $6.3 million on revenues of $14.2 million in the prior quarter. Net gain on investments was $22.0 million, an increase of 144 percent from $9.0 million in the prior quarter. PMT’s distressed mortgage loan portfolio generated realized and unrealized gains totaling $3.2 million, compared with realized and unrealized losses of $1.0 million in the prior quarter. Fair value gains on the performing loans in the distressed portfolio were $6.0 million while fair value losses on nonperforming loans were $3.2 million. The schedule below details the realized and unrealized gains (losses) on distressed mortgage loans: Overall, the performance of the distressed mortgage loan portfolio improved compared with the prior quarter, primarily driven by performing mortgage loans which benefitted from a strong market for these assets. Valuation gains also received a modest benefit from actual and forecasted home prices that were better than prior forecasts. These positive impacts were partially offset by greater than expected recidivism of previously performing loans. Net gain on CRT investments was $18.6 million compared with a gain of $10.4 million in the prior quarter. These gains resulted from higher income on a larger investment position and market-driven value changes related to credit spread tightening. At quarter end, PMT’s investments in CRT totaled $464 million compared with $450 million at December 31, 2016. Net interest income for the segment totaled $6.0 million, down 44 percent from the prior quarter. Interest income totaled $20.3 million, a 23 percent decline from the prior quarter. Interest income included $9.9 million of capitalized interest from loan modifications, which declined from $22.0 million in the prior quarter, driven by a reduction in modification activity. Capitalized interest increases interest income and reduces loan valuation gains. Interest expense totaled $14.3 million, down 9 percent from the prior quarter. Other investment losses were $2.3 million, compared with a $5.4 million loss in the prior quarter. The quarter-over-quarter decline was primarily due to trailing recoveries on previously sold REO. At quarter end, PMT’s inventory of REO properties totaled $224.8 million, down from $274.0 million at December 31, 2016. Segment expenses were $6.4 million, a 19 percent decrease from $7.9 million in the prior quarter. The decline was driven by lower loan liquidation fees relative to the prior quarter. The Interest Rate Sensitive Strategies segment includes results from investments in MSRs, excess servicing spread (ESS), Agency mortgage-backed securities (MBS), non-Agency senior MBS and interest rate hedges. The segment includes investments that have offsetting exposures to changes in interest rates. Interest Rate Sensitive Strategies generated pretax income of $0.7 million on revenues of $7.6 million, compared with pretax income of $5.4 million on revenues of $11.9 million in the prior quarter. The results in the Interest Rate Sensitive Strategies segment consist of net gain/loss on investments, net interest income and net loan servicing fees, as well as the associated expenses. The net loss on investments was $5.3 million, consisting of $0.3 million of gains on mortgage loans held by a variable interest entity, net of the related asset-backed secured funding; $4.1 million of losses on hedging derivatives; $1.4 million of losses on ESS; and $0.1 million of losses on MBS. Net interest income for the segment was $1.1 million, a 31 percent increase from the prior quarter. Interest income totaled $16.1 million, an 11 percent increase from the prior quarter. Interest expense totaled $15.0 million, a 10 percent increase from the prior quarter. Net mortgage loan servicing fees were $11.7 million, up from $7.8 million in the prior quarter. Net loan servicing fees included $38.5 million in servicing fees, reduced by $17.9 million of amortization and realization of MSR cash flows. Net loan servicing fees also included $1.5 million of impairment reversal for MSRs carried at the lower of amortized cost or fair value, a $2.0 million valuation loss on MSRs carried at fair value and $8.7 million of related hedging losses. Net loan servicing fees also included $0.3 million of MSR recapture income. PMT’s hedging activities are intended to manage its net exposure across all interest rate-sensitive strategies, which include MSRs, ESS and MBS. PMT’s MSR portfolio, which is subserviced by PFSI, grew to $59.6 billion in UPB compared with $56.3 billion at December 31, 2016. Significant volatility during the first quarter drove increased hedge costs, and inconsistent movements of the swaps, Treasury, and mortgage markets led to mismatches between asset and hedge performance. Furthermore, while the fair value of our MSR investments benefitted from lower expected prepayment activity, valuation gains for the portion carried at fair value were offset by the realization of cash flows. The loss on our ESS investments primarily resulted from higher than projected prepayment activity during the quarter, somewhat offset by recapture income totaling $1.6 million payable to PMT for prepayment activity during the quarter. When prepayment of a loan underlying PMT’s ESS results from a refinancing by PennyMac Financial Services, Inc. (NYSE: PFSI), PMT generally benefits from recapture income. Segment expenses were $6.8 million, a 4 percent increase from $6.5 million in the prior quarter, and reflect a larger servicing portfolio. PMT acquires newly originated mortgage loans from third-party correspondent sellers and typically sells or securitizes the loans, resulting in current-period income and ongoing investments in MSRs and GSE credit risk transfers related to a portion of its production. PMT’s Correspondent Production segment generated pretax income of $12.5 million versus $12.9 million in the prior quarter. Through its correspondent production activities, PMT acquired $13.9 billion in UPB of loans and issued IRLCs totaling $14.5 billion in the first quarter, compared with $20.0 billion and $19.2 billion, respectively, in the prior quarter. Of the correspondent acquisitions, conventional conforming acquisitions totaled $4.6 billion, and government-insured or guaranteed acquisitions totaled $9.3 billion, compared with $7.5 billion and $12.5 billion, respectively, in the prior quarter. Segment revenues were $30.8 million, a 28 percent decrease from the prior quarter, driven by a decline in net gain on mortgage loans. Net gain on mortgage loans acquired for sale in the quarter declined 19 percent from the prior quarter, driven by a 25 percent quarter-over-quarter decline in conventional lock volume and lower margins. The quarter-over-quarter performance reflects increased competition in a smaller market due to the significant decline in refinancing activity from higher mortgage rates and to a seasonally slow purchase-money market. Net gain on mortgage loans acquired for sale this quarter also included a $4.6 million benefit from a reduction in the estimate of the liability for representations and warranties. The following schedule details the net gain on mortgage loans acquired for sale: Segment expenses were $18.3 million, down 38 percent from $29.8 million in the prior quarter, driven by lower volume-based fulfillment fee expense. The weighted average fulfillment fee rate in the first quarter was 36 basis points, unchanged from the prior quarter. The Corporate segment includes interest income from certain cash and short-term investments, management fees and corporate expenses. Segment revenues were $326,000, a 62 percent increase from $201,000 in the prior quarter, driven by an increase in interest income due to higher cash balances in the first quarter. Management fees were $5.0 million, down 1 percent compared with $5.1 million in the prior quarter. There were no incentive fees due for the first quarter. Other segment expenses were $5.4 million compared with $5.8 million in the prior quarter. PMT recorded an income tax benefit of $6.1 million compared with a $17.3 million benefit in the prior quarter. The income tax benefit was primarily driven by the underperformance of the distressed loans and REO held in the taxable REIT subsidiary. “We have made significant progress transitioning capital to attractive opportunities in our correspondent production-related investments and away from distressed loan investments, which now represent one-third of PMT’s equity,” concluded Executive Chairman Stanford L. Kurland. “As we anticipated, higher interest rates during the quarter resulted in a mortgage market that is normalizing from the elevated margins and volumes seen in 2016. We have seen improvement in April due to a decline in interest rates and a pickup in home-buying activity that we expect to extend through the spring and summer homebuying season. PMT remains well-positioned to access investment opportunities that result from our correspondent production activities. We believe that these strategies have the potential to produce earnings in line with our dividend level.” Management’s slide presentation will be available in the Investor Relations section of the Company’s website at www.pennymac-REIT.com beginning at 1:30 p.m. (Pacific Daylight Time) on Thursday May 4, 2017. PennyMac Mortgage Investment Trust is a mortgage real estate investment trust (REIT) that invests primarily in residential mortgage loans and mortgage-related assets. PennyMac Mortgage Investment Trust trades on the New York Stock Exchange under the symbol “PMT” and is externally managed by PNMAC Capital Management, LLC, an indirect subsidiary of PennyMac Financial Services, Inc. Additional information about PennyMac Mortgage Investment Trust is available at www.PennyMac-REIT.com. 1 Return on average common equity is calculated based on annualized quarterly net income attributable to common shareholders as a percentage of monthly average common equity during the period. This press release contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, regarding management’s beliefs, estimates, projections and assumptions with respect to, among other things, the Company’s financial results, future operations, business plans and investment strategies, as well as industry and market conditions, all of which are subject to change. Words like “believe,” “expect,” “anticipate,” “promise,” “plan,” and other expressions or words of similar meanings, as well as future or conditional verbs such as “will,” “would,” “should,” “could,” or “may” are generally intended to identify forward-looking statements. Actual results and operations for any future period may vary materially from those projected herein and from past results discussed herein. Factors which could cause actual results to differ materially from historical results or those anticipated include, but are not limited to: changes in our investment objectives or investment or operational strategies, including any new lines of business or new products and services that may subject us to additional risks; volatility in our industry, the debt or equity markets, the general economy or the real estate finance and real estate markets specifically; events or circumstances which undermine confidence in the financial markets or otherwise have a broad impact on financial markets; changes in general business, economic, market, employment and political conditions, or in consumer confidence and spending habits from those expected; declines in real estate or significant changes in U.S. housing prices or activity in the U.S. housing market; the availability of, and level of competition for, attractive risk-adjusted investment opportunities in mortgage loans and mortgage-related assets that satisfy our investment objectives; the inherent difficulty in winning bids to acquire distressed loans or correspondent loans, and our success in doing so; the concentration of credit risks to which we are exposed; the degree and nature of our competition; the availability, terms and deployment of short-term and long-term capital; the adequacy of our cash reserves and working capital; our ability to maintain the desired relationship between our financing and the interest rates and maturities of our assets; the timing and amount of cash flows, if any, from our investments; unanticipated increases or volatility in financing and other costs, including a rise in interest rates; the performance, financial condition and liquidity of borrowers; incomplete or inaccurate information or documentation provided by customers or counterparties, or adverse changes in the financial condition of our customers and counterparties; changes in the number of investor repurchases or indemnifications and our ability to obtain indemnification or demand repurchase from our correspondent sellers; increased rates of delinquency, default and/or decreased recovery rates on our investments; increased prepayments of the mortgages and other loans underlying our mortgage-backed securities or relating to our mortgage servicing rights, excess servicing spread and other investments; the degree to which our hedging strategies may or may not protect us from interest rate volatility; the effect of the accuracy of or changes in the estimates we make about uncertainties, contingencies and asset and liability valuations when measuring and reporting upon our financial condition and results of operations; changes in regulations or the occurrence of other events that impact the business, operation or prospects of government sponsored enterprises; changes in government support of homeownership; changes in governmental regulations, accounting treatment, tax rates and similar matters; our ability to satisfy complex rules in order to qualify as a REIT for U.S. federal income tax purposes; and our ability to make distributions to our shareholders in the future. You should not place undue reliance on any forward-looking statement and should consider all of the uncertainties and risks described above, as well as those more fully discussed in reports and other documents filed by the Company with the Securities and Exchange Commission from time to time. The Company undertakes no obligation to publicly update or revise any forward-looking statements or any other information contained herein, and the statements made in this press release are current as of the date of this release only.


News Article | May 4, 2017
Site: www.businesswire.com

DALLAS--(BUSINESS WIRE)--Nationstar Mortgage Holdings Inc. (NYSE: NSM) today reported first quarter 2017 GAAP net income attributable to Nationstar of $2 million, or $0.02 per diluted share. On an adjusted basis, the Company reported earnings for the first quarter of $29 million, or $0.30 per share. "In the quarter, Servicing delivered solid operational results with 5.6 basis points in profitability,” said Jay Bray, Chairman and Chief Executive Officer. "For the third year in a row, our Servicing operations achieved Fannie Mae’s highest level of recognition for performance, which reflects the dedication of our team members in providing the best possible home loan experience to all of our nearly 3 million customers. In addition, we right-sized the Originations segment to operate efficiently in the current interest rate environment and made significant progress with Xome that we expect will drive enhanced earnings as we enter the second quarter. Looking forward, we believe we have significant growth prospects across all three segments and we continue to evaluate additional ways to increase shareholder value under our new Mr. Cooper brand.” The Servicing segment achieved $26 million GAAP pretax income or $65 million adjusted pretax income (5.6 bps) during the first quarter while boarding $18 billion UPB. Nationstar’s servicing portfolio, as measured by UPB, ended the first quarter relatively stable at approximately $470 billion. From the increased interest rate environment, prepayment speeds for the quarter declined to 14% for the overall platform or 11% if the impact of recapture is included. In addition, Nationstar’s 60-plus day delinquency rate decreased to 4% in the quarter as a result of completing more than 15,574 workouts and the boarding of lower delinquency portfolios. The continued reduction in delinquency rates and the future decline in prepayment speeds will ultimately benefit servicing cash flows through the extension of the duration of servicing assets. We presently have approximately $155 billion UPB scheduled to board throughout 2017. The portfolios are primarily subservicing portfolios with low levels of delinquency, attractive returns and provide an opportunity for Nationstar to offer a variety of corresponding mortgage solutions. Subserviced loans contribute less revenue, but generate higher margin and significantly higher return on equity due to the limited capital deployed. While expenses may be elevated in the short-term as we prepare to board the portfolios, we remain confident in achieving adjusted servicing profitability of 5 basis points or higher on average for full year 2017 through continued expense management and strong portfolio performance. The Originations segment posted $25 million GAAP pretax income or $27 million adjusted pretax income in the first quarter. Adjusted pretax income was down quarter-over-quarter due to the imbalance of pull through adjusted locked volume to funded volume caused by the significant change in interest rates in the prior quarter. We recognize revenue on locked volumes and incur expenses associated with funded volumes. We appropriately scaled operations for expected future volume and have already realized the benefits beginning in March. In March, we achieved a balance of pull through adjusted locked and funded volume of approximately $1.4 billion, and at the same time have maintained margins earning $15 million income before taxes. The originations platform continues to replenish the MSR portfolio at attractive rates of return. Nationstar funded $4.6 billion of volume during the quarter driven by the consumer direct channel which accounted for over 71% of the volume. In addition, we saw meaningful increases in the recapture percentage which increased to 32%. The Company continues to believe that significant refinance and purchase opportunities exist within our growing servicing portfolio. Xome delivered $13 million GAAP pretax income in the first quarter. Earnings declined due to lower property listing sales and completed service orders. Reduced volume from existing third-party customers due to seasonality and the current interest rate environment attributed to the service order decline. During the quarter, we made significant progress to increase our future property listings and services order volume that should generate earnings improvement in the upcoming quarters. The Company launched our referral program with a leading "sale-by-owner" platform which will provide homeowners with an outlet for their listings as well as access to key Xome features including its exchange platform, real-estate agent panel, and transaction-related services. In addition, we are expanding our white-label search capabilities to a greater share of the mortgage market. Furthermore, we continue to see progress in the addition of new clients across the segments as well as increasing capture with existing clients. The Company maintained a robust capital position with ratios well above current regulatory guidelines. The Company's sustained operating cash flows generated throughout the quarter allowed the Company to purchase $46 million of unsecured senior notes due between 2018 and 2022. The Company is authorized to repurchase up to $100 million of common stock pursuant to the previously-announced stock repurchase program. The Company will host a conference call on May 4, 2017 at 9:00 A.M. Eastern Time. The conference call may be accessed by dialing 855-874-2685, or 720-634-2923 internationally, five minutes prior to the scheduled start of the call. Please use the participant passcode 8358601 to access the conference call. A simultaneous audio webcast of the conference call will be available on the Shareholder Relations section of http://www.mynationstar.com. Please click on the May 4, 2017 Conference Call link to access the call. A replay will also be available approximately two hours after the conclusion of the conference call by dialing 855-859-2056, or 404-537-3406 internationally. Please use the passcode 8358601 to access the replay. The replay will be accessible through May 18, 2017. The Company utilizes non-GAAP (or “adjusted”) financial measures as the measures provide additional information to assist investors in understanding and assessing the Company’s and our business segments’ ongoing performance and financial results, as well as assessing our prospects for future performance. The adjusted financial measures facilitate a meaningful analysis and allow more accurate comparisons of our ongoing business operations because they exclude items that may not be indicative of or are unrelated to the Company’s and our business segments’ core operating performance, and are better measures for assessing trends in our underlying businesses. These adjustments are consistent with how management views our businesses. Management uses these non-GAAP financial measures in making financial, operational and planning decisions and evaluating the Company’s and our business segment’s ongoing performance. Adjusted earnings (loss) eliminates the effects of mark-to-market adjustments which primarily reflects unrealized gains or losses based on the changes in fair value measurements of MSRs and their related financing liabilities for which a fair value accounting election was made. These adjustments, which can be highly volatile and material due to changes in credit markets, are not necessarily reflective of the gains and losses that will ultimately be realized by the Company. Adjusted earnings (loss) also eliminates, as applicable, transition and integration costs, gains (losses) on sales of fixed assets, certain settlement costs that are not considered normal operational matters, and other adjustments based on the facts and circumstances that would provide investors a supplemental means for evaluating the Company’s core operating performance. Any statements in this release that are not historical or current facts are forward looking statements. These forward looking statements include, but are not limited to, statements regarding our growth prospects, Servicing segment's profitability and expected boardings, Originations refinancing and purchase opportunities and earnings improvement for Xome. Forward looking statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance, or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward looking statements. Certain of these risks and uncertainties are described in the "Business" and "Risk Factors" sections of our most recent annual report and other required documents as filed with the SEC which are available at the SEC’s website at http://www.sec.gov. Nationstar undertakes no obligation to publicly update or revise any forward looking statement or any other financial information contained herein, and the statements made in this press release are current as of the date of this release only. Note: Items may not sum due to rounding


News Article | February 23, 2017
Site: www.businesswire.com

NEW YORK--(BUSINESS WIRE)--Kroll Bond Rating Agency, Inc. (KBRA) is pleased to announce the assignment of preliminary ratings to the Class A notes, which are the sole class of securities issued in the VSD 2017-PLT1 transaction. VSD 2017-PLT1 is structured as a liquidation vehicle that monetizes recoveries from the assets to pay the rated notes. The transaction’s collateral is primarily comprised of performing loans (93.3% of the issuer’s basis), and also includes small exposures to non-performing loans (NPL) and real-estate-owned (REO) properties. Collectively, these equate to 201 assets, which have an aggregate unpaid principal balance (UPB) of $378.1 million and were acquired (191 assets) or originated (10 assets) by Värde Partners. Using the acquisition cost of the $299.6 million acquired assets and the UPB of the originated assets, the aggregate basis of the portfolio is $348.2 million (92.1% of UPB). The underlying collateral is comprised of commercial real estate properties (95.3% of the sponsor’s basis), land (4.5%) and single-family rental assets (0.2%). The top three state exposures are California (15.0%), Illinois (14.8%) and Texas (12.6%). The largest, top-ten, top-25 and top-50 relationships comprise 7.2%, 43.6%, 67.8%, and 84.2% of the pool’s acquisition basis, respectively. To evaluate and rate this transaction, KBRA followed a multi-step “ground-up” approach, which leveraged our commercial real estate methodologies. KBRA derived a “baseline value” for each collateral item using one or more methods. These included the income capitalization approach, comparable sales approach, as well as discounting third party valuation conclusions and the asset manager’s estimates of net recoveries. The baseline values were adjusted to derive KBRA’s baseline recovery proceeds, reflective of, among other items, the following: KBRA’s stressed resolution path and timeline, NOI captured from defaulted and REO assets, carry costs for non-income or negative-income producing assets, legal and foreclosure costs, and property sales costs. The baseline values and recovery proceeds were stressed further under the investment grade stress scenario. The resulting proceeds were applied to the transaction waterfall, while taking into account reserves, cash flow leakages and other structural elements, to determine our credit rating. This methodology is detailed in our publication entitled U.S. Liquidating Trust Rating Methodology for Pools of Distressed Commercial Real Estate, which was published on December 3, 2015, and can be accessed on our website. Overall, KBRA’s baseline recovery amounts were 83.9% of the UPB, 91.1% of the issuer’s acquisition basis, and 76.0% of the issuer’s projected net recovery amounts. For further details on KBRA’s analysis, please see our Presale Report, entitled VSD 2017-PLT1, which was published today at www.kbra.com. KBRA is registered with the U.S. Securities and Exchange Commission as a Nationally Recognized Statistical Rating Organization (NRSRO). In addition, KBRA is recognized by the National Association of Insurance Commissioners (NAIC) as a Credit Rating Provider (CRP).


News Article | March 1, 2017
Site: www.businesswire.com

NEW YORK--(BUSINESS WIRE)--Great Ajax Corp. (NYSE:AJX), a Maryland corporation that is a real estate investment trust, today announces results of operations for the quarter ended December 31, 2016. We focus primarily on acquiring, investing in and managing a portfolio of RPL mortgage loans secured by single-family residences and commercial properties, and, to a lesser extent, NPL mortgage loans and direct investment in single-family and multi-family properties. Consolidated net income for the quarter decreased primarily as a result of the increased impairments on our real estate held for sale (“REO”), discussed below, offset by an increase in our net interest income from our mortgage loan portfolio. Additionally, as previously disclosed, we recorded a one-time charge of $0.6 million related to the early call of our 2014 series secured notes. During the fourth quarter of 2016, we made a strategic decision to list for sale the majority of our single family single unit REO that were previously under consideration to become rental property. Generally Accepted Accounting Principles (“GAAP”) require us to record REO held-for-sale at the lower of cost or net realizable value. Accordingly, we accelerate recognition of any estimated losses but continue to defer potential gains until the property is sold. As a result, we recorded an impairment of $1.3 million on 60 of our 149 held-for-sale REO properties. The carrying value of our entire held-for sale REO portfolio and its estimated liquidation proceeds is as follows ($ in thousands): For loans that become REO, we believe that the earlier foreclosures out of any given loan pool typically are lower dollar value properties relative to the applicable metropolitan statistical area, with fewer or negative average dollars of equity. Conversely, we believe later-dated REO generally consists of better quality properties relative to the particular metropolitan statistical area of the property. Over 60% of REO impairments relate to foreclosed properties that we acquired as NPLs with underlying properties located in Florida, Maryland, New Jersey and New York. Additionally, the impairments were largely related to lower relative property values within their particular metropolitan statistical areas,or properties for which the loan to value ratios had been in excess of 100%. We continue to see the majority of foreclosures occurring on loans that we acquired as NPLs during the second half of 2014. We collected $29.1 million on our mortgage loan and REO portfolios through payments, payoffs and sales of REO during the quarter and ended the fourth quarter with $35.7 million in cash and cash equivalents, a $12.4 million increase from the prior quarter. Our investment strategy remains focused on acquiring RPLs and the percentage of RPLs relative to NPLs in our portfolio continues to increase. We continue to see significantly lower than expected re-default rates for purchased RPLs. As a result, the overall duration of the portfolio continues to extend, resulting in increased cash flow over the life of the loans and increased net asset value of the RPL portfolio as projected principal and interest payments increase, but lower yields and lower current period income as the cash flows occur over a longer time period. In addition to our continued focus on residential RPLs, we intend to increase our acquisitions of small balance commercial loans secured by multi-family residential and commercial mixed use retail/residential properties. We acquired $126.9 million and $2.0 million, respectively, of RPLs and NPLs during the quarter to end the year with $870.6 million of mortgage loans with aggregate UPB of $1,070.2 million. Mortgage loans purchased during the fourth quarter and held as of quarter-end were on our consolidated balance sheet for a weighted average of 43 days of the quarter. We closed on $57.9 million UPB of RPLs for $48.1 million on December 23, 2016. As a result of the acquisition, we incurred due diligence expense related to the acquisition, but had minimal corresponding income in 2016. On October 3, 2016, we entered into separate At-the-Market Issuance Sales Agreements to sell, through our agents, shares of our common stock with an aggregate offering price of up to $50.0 million. To date, we have not issued any shares pursuant to the agreements. Additional information about the At-the-Market Issuance Sales Agreements is available in our Current Report on Form 8-K filed with the Securities and Exchange Commission on October 3, 2016. On October 25, 2016, we completed our eighth securitization, Ajax Mortgage Loan Trust 2016-C. An aggregate of $102.6 million of senior securities and $15.8 million of subordinated securities were issued in a private offering with respect to $157.8 million UPB of mortgage loans, of which $12.9 million were small balance commercial mortgage loans. Nearly all the loans in the 2014-A and 2014-B securitizations that were called were re-securitized in 2016-C at a lower cost of funds and higher advance rate. Based on UPB approximately 82% of these mortgage loans were RPLs and approximately 18% were NPLs. Net proceeds from the sale of the senior securities provided leverage of approximately 3.9 times the related equity. The following table provides an overview of our portfolio at December 31, 2016 ($ in thousands): During January and February 2017, we acquired 21 RPLs with an aggregate UPB of $2.9 million in three transactions. The loans were acquired at 93.6% of UPB and the estimated market value of the underlying collateral is $5.5 million. The purchase price equaled 48.8% of the estimated market value of the underlying collateral. Additionally, we have agreed to acquire, subject to due diligence, 18 RPLs with aggregate UPB of $3.0 million in three transactions from three different sellers. The purchase price equals 85.0% of UPB and 57.9% of the estimated market value of the underlying collateral of $4.4 million. We have not entered into a definitive agreement with respect to these loans, and there is no assurance that we will enter into a definitive agreement relating to these loans or, if such an agreement is executed, that we will actually close the acquisitions or that the terms will not change. On February 16, 2017, our Board of Directors declared a dividend of $0.25 per share, which will be payable on March 31, 2017, to stockholders of record as of March 15, 2017. On February 16, 2017, our Board of Directors authorized an increase in the annual compensation of our independent directors from $50,000 to $75,000, payable half in shares of common stock of the Company and half in cash. On February 22, 2017, we issued 20,352 shares of our common stock to our Manager in payment of the stock-based component of the management fee due for the fourth quarter of 2016 in a private transaction. The management fee expense associated with these shares was recorded as an expense in the fourth quarter of 2016. On February 22, 2017, we issued each of our independent directors 415 shares of our common stock in payment of half of their quarterly director fees for the fourth quarter of 2016. Great Ajax will host a conference call at 5:00 p.m. EST, Wednesday, March 1, 2017 to review our financial results for the quarter. A live Webcast of the conference call will be accessible from the Investor Relations section of our website www.great-ajax.com. An archive of the Webcast will be available for 90 days. Great Ajax Corp. is a Maryland corporation that focuses primarily on acquiring, investing in and managing mortgage loans secured by single-family residences and, to a lesser extent, single-family properties themselves. We also invest in loans secured by multi-family residential and smaller commercial mixed use retail/residential properties, as well as in the properties directly. We are externally managed by Thetis Asset Management LLC. Our mortgage loans and other real estate assets are serviced by Gregory Funding LLC, an affiliated entity. We have elected to be taxed as a real estate investment trust under the Internal Revenue Code. This press release contains certain forward-looking statements. Words such as “believes,” “intends,” “expects,” “projects,” “anticipates,” and “future” or similar expressions are intended to identify forward-looking statements. These forward-looking statements are subject to the inherent uncertainties in predicting future results and conditions, many of which are beyond the control of Great Ajax, including, without limitation, the risk factors and other matters set forth in our Annual Report on Form 10-K for the period ended December 31, 2015 filed with the SEC on March 29, 2016. Great Ajax undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required by law.


News Article | February 22, 2017
Site: www.businesswire.com

DALLAS--(BUSINESS WIRE)--Nationstar Mortgage Holdings Inc. (NYSE: NSM) today announced that it generated fourth quarter GAAP net income attributable to Nationstar of $198 million, or $2.01 per diluted share driven principally by strong operating results, a favorable mark-to-market ("MTM") adjustment, and decreased amortization of the servicing portfolio. On an adjusted basis, the Company reported earnings for the fourth quarter of $35 million, or $0.36 per share, driven principally by sequential improvement in servicing profitability and strong originations earnings. "Nationstar had an incredible year of success in 2016,” said Jay Bray, Chairman and Chief Executive Officer. “We increased servicing profitability bps over 87% while ending the year with a record 2.9 million customers. Originations also had a banner year posting record earnings and funding more than $20 billion in loans. At Xome®, we continued to invest in new technologies and grow third-party business,” Bray added. “We enter 2017 with solid momentum and the opportunity to welcome almost 1 million new customers to our servicing platform as we continue on our journey to reinvent the mortgage experience for the customer and enhance our leadership role in residential servicing.” The Servicing segment achieved $348 million GAAP pretax income or $58 million adjusted pretax income (5.0 bps) during the fourth quarter. Adjusted pretax income improved by 49% over the prior quarter due to lower amortization, improvement in portfolio performance, and lower corporate overhead. We also continued to implement technology and process initiatives to drive overall servicing profitability higher. For the full year, the Servicing segment earned GAAP pretax income of $13 million, adjusted pretax income of $229 million or 5.6 bps which represents an 87% basis point improvement over 2015. Throughout the year we boarded $161 billion of loans, including $95 billion of subserviced loans, which are expected to generate significantly higher returns on equity due to the limited capital deployed. In addition, our new subservicing partners provide an additional source of future MSRs to replenish and grow our portfolio. The Company enters 2017 with strong tailwinds for the servicing segment that should continue to drive increased servicing profitability and cash flow. First, prepayments are trending lower, lengthening the duration and increasing the value of the servicing portfolio. Annualized CPR was 14% in January 2017 compared to an average of 18% for the fourth quarter of 2016. Second, Nationstar's continued ability to keep homeowners in their homes along with an improving economy enhances portfolio performance and drives down costs to service loans increasing overall profitability and cash flows. Third, the Company expects to board $144 billion UPB throughout 2017 with limited use of capital. This includes the recently announced subservicing agreement with New Residential where Nationstar will subservice approximately $111 billion UPB that New Residential has agreed to purchase, including $97 billion UPB of seasoned Agency MSRs from CitiMortgage, Inc. Based upon current boarding expectations we believe servicing profitability should approximate 5.0 bps or higher over the full year 2017. The Originations segment achieved $31 million GAAP pretax income or $43 million adjusted pretax income in the fourth quarter. Adjusted pretax income declined compared to the prior quarter, due to the increase in mortgage rates during the quarter and seasonality. For the full year, the Originations segment earned $209 million GAAP pretax income or $223 million adjusted pretax income, and increased customer recapture to 29%. The integrated originations platform continues to replenish the MSR portfolio at attractive rates of returns by providing customers with an extended array of mortgage options. To build increased awareness of our core brand and to drive customer retention, management decided to retire the Greenlight trademark as of year-end. This retirement accounts for the non-recurring charges in the fourth quarter. Key initiatives for the Originations segment in 2017 include increasing customer recapture across the entire servicing portfolio, expanding our government lending and streamlined offerings, and further reducing operating expenses. Xome delivered $16 million GAAP pretax income, or $18 million adjusted pretax income in the fourth quarter. Earnings were down sequentially due to a 9% reduction in property listing sales attributable partially to seasonality as well as a reduction in available inventory. Third-party revenues for the quarter, which primarily consist of leading financial institutions, were 44% of total revenues, as Xome continues to focus on diversifying its revenue streams and client base. For the full year, Xome earned $69 million GAAP pretax income or $77 million adjusted pretax income, while growing title operations, launching new SaaS initiatives and expanding third-party revenues. In the fourth quarter of 2016, Xome entered into a referral contract that combines Xome’s real estate brokerage, marketing, technology and transactional expertise with a leading “sale by owner” platform. Through this new program, homeowners who wish to sell their homes themselves will benefit from having access to Xome’s auction platform, real estate agent panel and additional transaction-related services while helping to market and amplify property listings for owners on the site. Key strategies for 2017 include improved profitability of core service offerings, expanding our SaaS and other technology offerings organically and through partnering with third parties to create innovative service offerings to customers as well as continued investment in new products and technologies that we believe will drive third-party revenues. The Company maintained a robust capital position with regulatory ratios well above regulatory standards. The Company is authorized to repurchase up to $100 million of common stock pursuant to the previously-announced stock repurchase program. Unless Nationstar amends the share repurchase program or repurchases the full $100 million amount by an earlier date, the share repurchase program will continue through December 2017. In addition, strong cash flow generation has enabled the Company to repurchase $11 million of unsecured senior notes in the fourth quarter, for a total of $40 million for the full year 2016. The Company will host a conference call on February 22, 2017 at 9:00 A.M. Eastern Time. The conference call may be accessed by dialing 855-874-2685, or 720-634-2923 internationally, five minutes prior to the scheduled start of the call. Please use the participant passcode 70143118 to access the conference call. A simultaneous audio webcast of the conference call will be available on the Shareholder Relations section of http://www.mynationstar.com. Please click on the February 22, 2017 Conference Call link to access the call. A replay will also be available approximately two hours after the conclusion of the conference call by dialing 855-859-2056, or 404-537-3406 internationally. Please use the passcode 70143118 to access the replay. The replay will be accessible through March 8, 2017. The Company utilizes non-GAAP (or “adjusted”) financial measures as the measures provide additional information to assist investors in understanding and assessing the Company’s and our business segments’ ongoing performance and financial results, as well as assessing our prospects for future performance. The adjusted financial measures facilitate a meaningful analysis and allow more accurate comparisons of our ongoing business operations because they exclude items that may not be indicative of or are unrelated to the Company’s and our business segments’ core operating performance, and are better measures for assessing trends in our underlying businesses. These adjustments are consistent with how management views our businesses. Management uses these non-GAAP financial measures in making financial, operational and planning decisions and evaluating the Company’s and our business segment’s ongoing performance. Adjusted earnings (loss) eliminates the effects of mark-to-market adjustments which primarily reflects unrealized gains or losses based on the changes in fair value measurements of MSRs and their related financing liabilities for which a fair value accounting election was made. These adjustments, which can be highly volatile and material due to changes in credit markets, are not necessarily reflective of the gains and losses that will ultimately be realized by the Company. Adjusted earnings (loss) also eliminates, as applicable, restructuring costs, rebranding and integration costs, gains (losses) on sales of fixed assets, certain legal settlement costs that are not considered normal operational matters, and other adjustments based on the facts and circumstances that would provide investors a supplemental means for evaluating the Company’s core operating performance. Any statements in this release that are not historical or current facts are forward looking statements. These forward looking statements include, but are not limited to, statements regarding our Servicing segment's profitability, cash flow, pipeline and key initiatives in 2017 for Originations and Xome. Forward looking statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance, or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward looking statements. Certain of these risks and uncertainties are described in the "Business" and "Risk Factors" sections of our most recent annual report and other required documents as filed with the SEC which are available at the SEC’s website at http://www.sec.gov. Nationstar undertakes no obligation to publicly update or revise any forward looking statement or any other financial information contained herein, and the statements made in this press release are current as of the date of this release only.


News Article | February 15, 2017
Site: www.businesswire.com

MOUNT LAUREL, N.J.--(BUSINESS WIRE)--PHH Corporation (NYSE: PHH) (“PHH” or the “Company”) today announced financial results for the quarter ended December 31, 2016. For the quarter ended December 31, 2016, the Company reported Net loss attributable to PHH Corporation of $133 million or $2.49 per basic share. Net loss attributable to PHH Corporation for the quarter ended December 31, 2015, was $54 million or $0.92 per basic share. For the quarter ended December 31, 2016, core loss (after-tax)* and core loss per share* were $100 million and $1.86, respectively, which exclude a $55 million pre-tax unfavorable market-related mortgage servicing rights ("MSR") fair value adjustment, net of derivatives related to MSRs. Glen A. Messina, president and CEO of PHH Corporation, said, "After a comprehensive examination of all available strategic options, we have decided to close or exit our least profitable businesses, monetize a substantial amount of our assets and operate a smaller, focused, capital-light subservicing and portfolio retention business. These actions will allow us to minimize restructuring costs, maximize near-term capital distributions, preserve the value of our tax assets, and create incremental value through the ongoing operation of the business or future strategic actions, which we believe will maximize value for shareholders. We believe the remaining business platforms comprised of subservicing and portfolio retention have the potential to achieve low double-digit to mid-teen returns on capital after the completion of certain cost re-engineering, PLS exit, organic growth, and return of capital actions, and the resolution of our legacy legal and regulatory matters." Messina also commented, "Our financial performance for the fourth quarter reflects higher expenses related to certain outcomes of our strategic review process, including $41 million of PLS exit costs, a $23 million write-down of our investment in the STARS appraisal business, and transaction and advisory expenses." Our results in each respective period included the following: Core earnings or loss (pre-tax), core earnings or loss (after-tax), core earnings or loss per share, and adjusted cash flow are financial measures that are not in accordance with U.S. generally accepted accounting principles (GAAP). See the “Note Regarding Non-GAAP Financial Measures” below for a detailed description and reconciliation of such Non-GAAP financial measures to their most directly comparable GAAP financial measures, as required by Regulation G. Mortgage Production segment loss in the fourth quarter of 2016 was $62 million, compared to a segment profit of $22 million in the third quarter of 2016 and a segment loss of $21 million in the fourth quarter of 2015. The $84 million unfavorable change in segment results for the fourth quarter of 2016 compared to the third quarter of 2016 was primarily due to a $72 million decrease in Net revenues and an $18 million increase in Total expenses. The decline in Net revenues was primarily due to an unfavorable change to Other (loss) income driven by a $23 million impairment on our equity investment in Speedy Title and Appraisal Review Services LLC ("STARS"), a $37 million decrease in Gain on loans held for sale, net driven by a 43% decline in IRLCs expected to close, and a $10 million decline in Origination and other loan fees primarily driven by a 17% decrease in closing units from our real estate channel. The increase in Total expenses was primarily driven from Exit and disposal costs of $33 million related to our exit of the private label solutions ("PLS") business that was partially offset by a $6 million decline in Loan origination expenses and a $4 million decline in Commissions from lower overall closing and application volumes in the fourth quarter of 2016. The $41 million unfavorable change in segment results for the fourth quarter of 2016 compared to the fourth quarter of 2015 was primarily due to a $30 million decrease in Net revenues and a $14 million increase in Total expenses. The decrease in Net revenues was primarily due to an unfavorable change to Other (loss) income from a $23 million impairment on our equity method investment in STARS and a decrease of $11 million in Gain on loans held for sale, net driven by a 41% decline in IRLCs expected to close that was partially offset by a 100 basis point increase in average total loan margins. The increase in Total Expenses was primarily driven by the $33 million of Exit and disposal costs for the fourth quarter of 2016 that was partially offset by a $9 million decline in Other operating expenses primarily due to lower Corporate overhead costs from a reduced allocation to the Mortgage Production segment in 2016 as compared to 2015 and a $7 million decline in Loan origination expenses from lower overall closing and application volumes in the fourth quarter of 2016. Total fourth quarter 2016 mortgage closings were $8.9 billion, down 11% from the third quarter of 2016 and consistent with the fourth quarter of 2015. The decrease in total closings compared to the third quarter of 2016 was primarily attributable to seasonal declines in purchase volume. Our consistent total closings as compared to the fourth quarter of 2015 was driven by an increase in refinance closings from our portfolio recapture efforts that was offset by the exit from our wholesale/correspondent lending channel during the second quarter of 2016. IRLCs expected to close of $688 million in the fourth quarter of 2016 decreased 43% from the third quarter of 2016 and 41% from the fourth quarter of 2015. Total loan margin on IRLCs expected to close for the fourth quarter of 2016 was 405 bps, a 17 bps increase from the third quarter of 2016 and a 100 bps increase from the fourth quarter of 2015. The increase in margins is consistent with the decline in interest rates experienced beginning in June through November 2016 as loan margins tend to widen in periods of declining interest rates as industry participants attempt to balance origination volume with operational capacity. We began executing our plan to exit the PLS business in the fourth quarter of 2016. The PLS business represented 80% of our total closing volume (based on dollars) for the fourth quarter of 2016. We currently believe that we will be in a position to substantially exit the PLS business by the first quarter of 2018, subject to certain transition support requirements, and we currently have exit plans in place with clients representing approximately 55% of our PLS closing volume (based on closing dollars for the year ended December 31, 2016). For the year ended December 31, 2016, we have incurred $41 million of exit costs (pre-tax) related to the exit of PLS, which includes severance and retention programs, contract termination costs and a $15 million non-cash charge for asset impairment. We estimate we will incur approximately $75 million of additional exit costs (pre-tax) over the next 15 months. Additionally, while we implement the exit from this channel, we expect to incur pre-tax operating losses of approximately $120 million for PLS, including maintaining the support and compliance infrastructure needed to comply with both regulatory and contractual requirements. Mortgage Servicing segment loss in the fourth quarter of 2016 was $117 million, compared to a segment loss of $52 million and $65 million in the third quarter of 2016 and fourth quarter of 2015, respectively. The $65 million decline in segment results for the fourth quarter of 2016 compared to the third quarter of 2016 was due to a $53 million unfavorable change in Net revenues and a $12 million increase in Total Expenses. The decrease in Net revenues was primarily due to a $42 million greater loss from Market-related fair value adjustments of our MSRs, net of related derivatives. Our market-related fair value adjustments were primarily driven by $35 million of negative model adjustments in the fourth quarter of 2016 to reflect increased servicing costs and foreclosure losses and by a calibration of our valuation model considering the pricing associated with the MSR agreements executed in the fourth quarter of 2016, as we did not observe market participant pricing that was commensurate with the expectations associated with the sharp increase in interest rates after the U.S. presidential election. Additionally, we experienced a $7 million decline in Loan servicing income from a smaller average total loan servicing portfolio. The increase in Total expenses was primarily driven by $11 million in greater provisions for Legal and regulatory reserves. The $52 million unfavorable change in segment results for the fourth quarter of 2016 compared to the fourth quarter of 2015 was due to a $21 million decrease in Net revenues and a $31 million increase in Total expenses. The decrease in Net revenues was primarily due to a $14 million decline in Loan servicing income from a smaller average capitalized loan servicing portfolio. The increase in Total expenses was primarily driven by $22 million in greater provisions for Legal and regulatory reserves and $8 million of higher Repurchase and foreclosure-related charges driven by increased expenses that will not be reimbursed pursuant to mortgage insurance programs. In December 2016, we entered into resolution agreements with Fannie Mae and Freddie Mac to resolve substantially all representation and warranty exposure related to the sale of mortgage loans that were originated and delivered prior to September 30, 2016 and November 30, 2016, respectively. The resolution agreements do not cover loans with certain defects, which include but are not limited to, loans with certain title issues or with violations of law. The settlement amounts did not significantly exceed our recorded reserves. At December 31, 2016, the book value of our MSRs was $690 million, representing an 82 bps capitalized servicing rate. The MSR book value and capitalized servicing rate at September 30, 2016 was $645 million and 73 bps of the capitalized loan servicing portfolio. The MSR book value at December 31, 2015 was $880 million, representing an 89 bps capitalized servicing rate. For the fourth quarter of 2016, there was a $74 million increase from market-related fair value adjustments and $15 million in MSR book value that was added from loans sold that was partially offset by a $40 million decrease related to prepayments and the receipt of recurring cash flows and a $4 million decrease from MSR sales, as described in more detail below. At December 31, 2016, the unpaid principal balance (“UPB”) of our capitalized servicing portfolio was $84.7 billion, down 4% from September 30, 2016 and down 14% from December 31, 2015. Our capitalized servicing portfolio continues to decline due to the recent low interest rate environment leading to high prepayment activity that has exceeded additions from new loan production. In the fourth quarter of 2016, we entered into agreements to sell substantially all of our MSRs to New Residential Investment Corp. ("New Residential") and Lakeview Loan Servicing ("Lakeview"). The following table summarizes our MSRs committed under sale agreements, based on the portfolio as of December 31, 2016: In connection with the MSR sales, we expect to transfer approximately $300 million of Servicing advances (based on the December 31, 2016 portfolio). On February 2, 2017, the initial sale of GNMA MSRs to Lakeview was completed, representing $10.3 billion unpaid principal balance, $77 million of MSR fair value, and $11 million of Servicing advances. We expect to receive total proceeds of $88 million from the initial transfer. The final proceeds received from the MSR sales is dependent on the closing of the MSR sales, as well as portfolio composition and servicing advances outstanding at each transfer date, the amount of investor and origination source consents received, and transaction costs. The sale of $440 million of MSRs and Servicing advances currently requires consents other than GSEs. At December 31, 2016, our subservicing portfolio consisted of approximately 265,000 units, down 44% from September 30, 2016 and down 41% from December 31, 2015. Our total subservicing units declined by approximately 211,000 units during the fourth quarter of 2016 driven by the insourcing of Merrill Lynch Home Loans's portfolio and HSBC Bank USA’s sale of a population of loans that we subserviced. Net loss before income taxes for the fourth quarter of 2016 was $27 million, due to Strategic review expenses of $19 million and Exit and disposal costs related to PLS of $8 million that were not allocated back to our reportable segments. The Company will host a conference call at 10:00 a.m. (Eastern Time) on Thursday, February 16, 2017, to discuss its fourth quarter 2016 results. All interested parties are welcome to participate. An investor presentation with an appendix of supplemental schedules will accompany the conference call and be available by visiting the Investor Relations page of PHH's website at www.phh.com on Thursday, February 16, 2017, prior to the start of the conference call. You can access the conference call by dialing (888) 656-7432 or (913) 312-1460 and using the conference ID 7799107 approximately 10 minutes prior to the call. The conference call will also be webcast, which can be accessed from the Investor Relations page of PHH's website at www.phh.com under webcasts and presentations. A replay will be available beginning shortly after the end of the call through March 3, 2017, by dialing (888) 203-1112 or (719) 457-0820 and using conference ID 7799107, or by visiting the Investor Relations page of PHH's website at www.phh.com. Headquartered in Mount Laurel, New Jersey, PHH Corporation is a leading provider of end-to-end mortgage solutions through its subsidiary, PHH Mortgage. Its outsourcing model and proven expertise, combined with a strong commitment to operational excellence and customer service, has enabled PHH Mortgage to become one of the largest non-bank originators and servicers of residential mortgages in the United States. PHH Mortgage provides mortgage solutions for the real estate market and financial institutions, and offers home financing directly to consumers. For additional information, please visit www.phh.com. Certain statements in this press release are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Generally, forward looking-statements are not based on historical facts but instead represent only our current beliefs regarding future events. All forward-looking statements are, by their nature, subject to risks, uncertainties and other factors that could cause actual results, performance or achievements to differ materially from those expressed or implied in such forward-looking statements. Investors are cautioned not to place undue reliance on these forward-looking statements. Such statements may be identified by words such as “expects,” “anticipates,” “intends,” “projects,” “estimates,” “plans,” “may increase,” “may fluctuate” and similar expressions or future or conditional verbs such as “will,” “should,” “would,” “may” and “could.” You should understand that forward-looking statements are not guarantees of performance or results and are preliminary in nature. You should consider the areas of risk described under the heading “Cautionary Note Regarding Forward-Looking Statements” and “Risk Factors” in our periodic reports filed with the U.S. Securities and Exchange Commission, including our most recent Annual Report on Form 10-K and Quarterly Reports on Form 10-Q, in connection with any forward-looking statements that may be made by us or our businesses generally. Such periodic reports are available in the “Investors” section of our website at http://www.phh.com and are also available at http://www.sec.gov. Except for our ongoing obligations to disclose material information under the federal securities laws, applicable stock exchange listing standards and unless otherwise required by law, we undertake no obligation to release publicly any updates or revisions to any forward-looking statements or to report the occurrence or non-occurrence of anticipated or unanticipated events. Core earnings or loss (pre-tax and after-tax), core earnings or loss per share, and adjusted cash flow, are financial measures that are not in accordance with GAAP. See Non-GAAP Reconciliations below for a reconciliation of these measures to the most directly comparable GAAP financial measures as required by Regulation G. These Non-GAAP measures are used in managing certain aspects of the Company’s business. For example, management’s reviews of results incorporate Non-GAAP measures and certain of the Company’s debt agreements contain covenants calculated using a measure similar to the calculations of the Non-GAAP measures. The Company has also designed certain management incentives based upon the achievement of targets related to Non-GAAP measures. The Company believes that these Non-GAAP Financial Measures can be useful to investors because they provide a means by which investors can evaluate the Company’s underlying key drivers and operating performance of the business, exclusive of certain adjustments and activities that investors may consider to be unrelated to the underlying economic performance of the business for a given period. The Company also believes that any meaningful analysis of the Company’s financial performance by investors requires an understanding of the factors that drive the Company’s underlying operating performance which can be obscured by significant unrealized changes in value of the Company’s mortgage servicing rights, as well as any gain or loss on derivatives that are intended to offset market-related fair value adjustments on the Company’s mortgage servicing rights. The Company believes these Non-GAAP measures provide useful information to investors that is supplementary to our results in accordance with GAAP; however, there are inherent limitations to these measures and they should not be viewed as a substitute for our results in accordance with GAAP as measurements of the Company's financial performance. Core earnings or loss (pre-tax and after-tax) and core earnings or loss per share Core earnings or loss (after-tax) and core earnings or loss per share involves differences from Net income or loss attributable to PHH Corporation and Basic earnings or loss per share attributable to PHH Corporation computed in accordance with GAAP. Core earnings or loss (pre-tax and after-tax) and core earnings or loss per share measure the Company’s financial performance excluding unrealized changes in fair value of the Company’s mortgage servicing rights that are based upon projections of expected future cash flows and prepayments as well as realized and unrealized changes in the fair value of derivatives that are intended to offset changes in the fair value of mortgage servicing rights. The changes in fair value of mortgage servicing rights and related derivatives are highly sensitive to changes in interest rates and are dependent upon the level of current and projected interest rates at the end of each reporting period. Adjusted cash flow measures the Company’s Net increase or decrease in cash and cash equivalents for a given period excluding changes resulting from the issuance or repurchase of equity or the issuance or repayment of unsecured or other debt by PHH Corporation. The Company believes that Adjusted cash flow is a useful measure for investors because the measure may assist investors in determining the amount of cash and cash equivalents generated from business activities during a period that is available to repay unsecured debt or distribute to holders of the Company’s equity. Adjusted cash flow can be generated through a combination of earnings, more efficient utilization of asset-backed funding facilities, or an improved working capital position and can vary significantly between periods based upon a variety of potential factors including, but not limited to, timing related to cash collateral postings, mortgage origination volumes and loan margins.


News Article | February 15, 2017
Site: www.marketwired.com

MCLEAN, VA--(Marketwired - Feb 14, 2017) - Freddie Mac ( : FMCC) today priced a $752.5 million Structured Agency Credit Risk (STACR®) debt notes offering, the first high LTV deal of the year. Through STACR, its flagship credit risk transfer offering, Freddie Mac transfers a significant portion of its mortgage credit risk on certain groups of loans to private investors. STACR 2017-HQA1 has a reference pool of single-family mortgages with an unpaid principal balance (UPB) of approximately $29.7 billion, consisting of a subset of fixed-rate, single-family mortgages with an original term of 241 to 360 months acquired by Freddie Mac between April 1, 2016, and July 31, 2016 and with LTVs ranging from 80 to 97 percent. Freddie Mac holds the senior loss risk in the capital structure and a portion of the risk in the Class M-1, M-2 and B-1 tranches, and also a significant portion of the first loss in the B-2 tranche. Citigroup Global Markets Inc. and J.P. Morgan Securities LLC are co-lead managers and joint bookrunners. Freddie Mac has led the market in introducing new credit risk-sharing offerings with STACR, Agency Credit Insurance Structure (ACIS®) and Whole Loan Securities (WLS(SM)). The company has since grown its investor base to more than 200 unique investors, including insurers and reinsurers. Since 2013, the company has transferred a significant portion of credit risk on approximately $665 billion of UPB on single-family mortgages. Freddie Mac has a STACR issuance calendar to help investors plan their allocations. This announcement is not an offer to sell any Freddie Mac securities. Offers for any given security are made only through applicable offering circulars and related supplements, which incorporate Freddie Mac's Annual Report on Form 10-K for the year ended December 31, 2015, filed with the Securities and Exchange Commission (SEC) on February 18, 2016; all other reports Freddie Mac filed with the SEC pursuant to Section 13(a) of the Securities Exchange Act of 1934 (Exchange Act) since December 31, 2015, excluding any information "furnished" to the SEC on Form 8-K; and all documents that Freddie Mac files with the SEC pursuant to Sections 13(a), 13(c) or 14 of the Exchange Act, excluding any information furnished to the SEC on Form 8-K. Freddie Mac's press releases sometimes contain forward-looking statements. A description of factors that could cause actual results to differ materially from the expectations expressed in these and other forward-looking statements can be found in the company's Annual Report on Form 10-K for the year ended December 31, 2015, and its reports on Form 10-Q and Form 8-K, filed with the SEC and available on the Investor Relations page of the company's Web site at www.FreddieMac.com/investors and the SEC's Web site at www.sec.gov. Freddie Mac makes home possible for millions of families and individuals by providing mortgage capital to lenders. Since our creation by Congress in 1970, we've made housing more accessible and affordable for homebuyers and renters in communities nationwide. We are building a better housing finance system for homebuyers, renters, lenders and taxpayers. Learn more at FreddieMac.com, Twitter @FreddieMac and Freddie Mac's blog FreddieMac.com/blog.


News Article | February 22, 2017
Site: globenewswire.com

WEST PALM BEACH, Fla., Feb. 22, 2017 (GLOBE NEWSWIRE) -- Ocwen Financial Corporation, (NYSE:OCN) (“Ocwen” or the “Company”), a leading financial services holding company, today reported a net loss of $(10.4) million, or $(0.08) per share, for the three months ended December 31, 2016 compared to a net loss of $(224.3) million, or $(1.79) per share, for the three months ended December 31, 2015.  Ocwen generated revenue of $323.9 million, down 10.6% compared to the fourth quarter of the prior year, primarily driven by the impact of portfolio run-off.  Cash Flows from Operating Activities were $124.2 million for the three months ended December 31, 2016, compared to  $(192.4) million during the same period last year. The full year net loss for 2016 was $(199.4) million, or $(1.61) per share, as compared to a loss of $(246.7) million, or $(1.97) per share for 2015.  Revenue for 2016 was $1.4 billion, a decline of $354 million, or 20.3%.  The Company generated $475 million of Cash Flows from Operating Activities in 2016 and ended the year with $257 million of cash.  At December 31, 2016, the Company had not yet paid various potential legal and regulatory settlement amounts expensed in 2016 totaling approximately $68 million. “We are pleased with the progress the Company made in the second half of the year.  Not only did we deliver significantly improved financial performance versus the first half of the year, we continued our industry leadership in helping struggling families remain in their homes through responsible loan modifications.  We also refinanced our corporate debt, improved our cost structure and raised our servicer ratings and rankings.  In addition, we continued to make progress towards resolving our major legacy legal and regulatory issues; but more progress is needed for us to complete our stabilization process,” commented Ron Faris, President and CEO of Ocwen. Pre-tax loss for the fourth quarter of 2016 was $(10.2) million. Pre-tax results for the quarter were impacted by a number of significant items including but not limited to: $31.6 million of benefit from fair value changes related to GNMA and GSE MSRs (excluding runoff), $(16.3) million of corporate debt refinance-related expenses, $(12.5) million in potential regulatory settlement-related reserves, $(8.5) million of regulatory monitor costs and $0.6 million of other items.  Excluding these significant items, the Company had an adjusted pre-tax loss of $(5.1) million. The Servicing segment recorded $43.3 million of pre-tax income, inclusive of the MSR fair value changes, which was favorable compared to the prior quarter by $10.1 million.  For the full year 2016, the Servicing business recorded a $(6.5) million pre-tax loss, a decrease of only $22.4 million over 2015 as the business was successful in offsetting most of the impact of lower revenue from UPB run-off and $(75.4) million lower agency MSR sales-related gains versus 2015 by improving its cost structure in 2016 and successfully executing on the streamline HAMP modification program. The Lending segment incurred a $(3.1) million pre-tax loss for the fourth quarter of 2016, $(6.7) million unfavorable to the prior quarter, driven by a 10% decline in volumes and lower margins.  For the full year 2016, the Lending business earned $10 million of pre-tax income, a decrease of $24 million versus 2015 driven by lower margins due to significantly lower HARP opportunities and increased expenses from investments in the business. The Automotive Capital Services business continued to grow, increasing inventory finance gross receivables outstanding by $12 million or 45% over the third quarter of 2016.  Overall, the business increased the receivables outstanding at year-end by $37 million or 14x in 2016.  As of February 17, 2017, the business is operating in 35 markets with 68 active auto dealerships and has approved credit facilities of $91 million with these dealerships. Ocwen will host a webcast and conference call on Wednesday, February 22, 2017, at 5 p.m., Eastern Time, to discuss its financial results for the fourth quarter of 2016.  The conference call will be webcast live over the internet from the Company’s website at www.Ocwen.com.  To access the call, click on the “Shareholder Relations” section. A replay of the conference call will be available via the website approximately two hours after the conclusion of the call and will remain available for approximately 30 days. Ocwen Financial Corporation is a financial services holding company which, through its subsidiaries, originates and services loans. We are headquartered in West Palm Beach, Florida, with offices throughout the United States and in the U.S. Virgin Islands as well as in India and the Philippines.  We have been serving our customers since 1988.  We may post information that is important to investors on our website (www.Ocwen.com). This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements may be identified by a reference to a future period or by use of forward-looking terminology. Forward-looking statements by their nature address matters that are, to different degrees, uncertain. Our business has been undergoing substantial change which has magnified such uncertainties. Readers should bear these factors in mind when considering such statements and should not place undue reliance on such statements. Forward-looking statements involve a number of assumptions, risks and uncertainties that could cause actual results to differ materially. In the past, actual results have differed from those suggested by forward looking statements and this may happen again. Important factors that could cause actual results to differ materially from those suggested by the forward-looking statements include, but are not limited to, the following: our servicer and credit ratings as well as other actions from various rating agencies, including the impact of downgrades of our servicer and credit ratings; adverse effects on our business as a result of regulatory investigations or settlements; reactions to the announcement of such investigations or settlements by key counterparties; increased regulatory scrutiny and media attention; claims, litigation and investigations brought by government agencies and private parties regarding our servicing, foreclosure, modification and other practices, including uncertainty related to the past, present or future investigations and settlements with state regulators, the CFPB, State Attorneys General, the SEC, Department of Justice or HUD and actions brought on under the False Claims Act by private parties on behalf of the United States of America regarding incentive and other payments made by government entities; any adverse developments in existing legal proceedings or the initiation of new legal proceedings; our ability to effectively manage our regulatory and contractual compliance obligations; our ability to contain and reduce our operating costs, including our ability to successfully execute on our cost improvement initiative; the adequacy of our financial resources, including our sources of liquidity and ability to sell, fund and recover advances, repay borrowings and comply with debt covenants contained in them; volatility in our stock price; the characteristics of our servicing portfolio, including prepayment speeds along with delinquency and advance rates; our ability to successfully modify delinquent loans, manage foreclosures and sell foreclosed properties; uncertainty related to legislation, regulations, regulatory agency actions, government programs and policies, industry initiatives and evolving best servicing practices; as well as other risks detailed in Ocwen’s reports and filings with the Securities and Exchange Commission (SEC), including its annual report on Form 10-K for the year ended December 31, 2016.  Anyone wishing to understand Ocwen’s business should review its SEC filings.  Ocwen’s forward-looking statements speak only as of the date they are made and, we disclaim any obligation to update or revise forward-looking statements whether as a result of new information, future events or otherwise. This press release contains certain non-GAAP financial measures, such as our reference to adjusted pre-tax loss. We believe these non-GAAP financial measures provide a useful supplement to discussions and analysis of our financial condition. We believe these non-GAAP financial measures provide an alternative way to view certain aspects of our business that is instructive. Non-GAAP financial measures should be viewed in addition to, and not as an alternative for, Ocwen's reported results under accounting principles generally accepted in the United States. Other companies may use non-GAAP financial measures with the same or similar titles that are calculated differently to our non-GAAP financial measures. As a result, comparability may be limited. Further information may be found on Ocwen's website. (1) Performing loans include those loans that are less than 90 days past due and those loans for which borrowers are making scheduled payments under loan modification, forbearance or bankruptcy plans. We consider all other loans to be non-performing. (2) Average CPR for the prior three months. CPR measures prepayments as a percentage of the current outstanding loan balance expressed as a compound annual rate. (3) Average CPR for the three months ended December 31, 2016 includes 19.9% for prime loans and 12.1% for non-prime loans.


News Article | February 23, 2017
Site: globenewswire.com

IRVINE, Calif., Feb. 23, 2017 (GLOBE NEWSWIRE) -- Impac Mortgage Holdings, Inc. (NYSE MKT:IMH) announces the financial results for the fourth quarter and year ended December 31, 2016.  For the year ended 2016, the Company reported GAAP net earnings of $46.7 million, or $3.31 per diluted common share and Adjusted Operating Income (as defined below) of $96.9 million, or $6.52 per diluted common share.  For the year ended 2015,  the Company reported GAAP net earnings of $80.8 million, or $6.40 per diluted common share, and Adjusted Operating Income of $33.5 million, or $2.56 per diluted common share. Operating income, excluding the changes in contingent consideration (“Adjusted Operating Income”), is considered a non-GAAP financial measurement; see the discussion and reconciliation on non-GAAP financial measures below. For the quarter ended December 31, 2016, the Company reported GAAP net earnings of $16.9 million, or $1.00 per diluted common share, and Adjusted Operating Income of $23.9 million, or $1.37 per diluted common share.  For the quarter ended December 31, 2015, the Company reported GAAP net earnings of $10.7 million, or $0.85 per diluted common share, and adjusted operating loss of $(593) thousand or $(0.04) per diluted common share. Net earnings include fair value adjustments for changes in the contingent consideration, long-term debt and net trust assets.  The contingent consideration is related to the CashCall Mortgage (“CCM”) acquisition transaction, while the other fair value adjustments are related to our legacy portfolio.  These fair value adjustments are non-cash items and are not related to current operating results.  Although we are required by GAAP to record change in fair value and accretion of the contingent consideration, management believes operating income excluding contingent consideration changes and the related accretion is more useful to discuss the ongoing and future operations of the Company.   The table below shows operating income excluding these items: Adjusted Operating Income increased to $96.9 million or $6.52 per diluted common share for 2016 as compared to $33.5 million or $2.56 per diluted common share in 2015.  The increase in operating income of $63.4 million in 2016, as compared to 2015, was primarily due to an increase in gain on sale of loans of $141.8 million resulting from a 40% increase in volume (as discussed below) combined with an increase in gain on sale margins of 58 basis point (“bps”) to 241 bps in 2016.  This increase in gain on sale of loans was offset primarily by a loss on mortgage servicing rights (“MSR”) of $36.4 million in 2016, as discussed below. As of December 31, 2016, the unpaid principal balance (“UPB”) of the Company’s mortgage servicing portfolio increased to $12.4 billion, a 31% increase from September 30, 2016, which contributed to the increase in the fair value of our retained MSRs to $131.5 million at December 31, 2016 as compared to $87.4 million at September 30, 2016. The gain (loss) on mortgage servicing rights primarily consists of the following: During the year ended December 31, 2016, prepayments of the servicing portfolio were $2.9 billion of UPB. However we successfully recaptured and refinanced an estimated 76% of these prepayments. During the fourth quarter of 2016, we recorded a $4.8 million gain on MSR, primarily due to a rise in interest rates in the quarter, which resulted in a mark-to-market (“MTM”) gain of $7.7 million that was offset by a hedge loss of $2.8 million. The change in fair value of mortgage servicing rights in the fourth quarter of 2016, consisted of $4.1 million in MSR MTM losses due to prepayments offset by a MTM gain at December 31, 2016 of $11.7 million, as a result of an increase in rates during the fourth quarter of 2016. During 2016, the $36.4 million loss in MSR was primarily due to $34.9 million in charges associated with MSR amortization due to the retention of the servicing portfolio, as discussed in prior quarters. However, in the fourth quarter, MSR amortization changes from retention runoff have slowed substantially due to the rise of interest rates. The servicing portfolio generated net servicing income of $5.1 million in the fourth quarter of 2016, a 33% increase over the third quarter of 2016.  Additionally, delinquencies within the servicing portfolio remain low at 0.25% for 60+ delinquencies as of December 31, 2016. During the year ended 2016, total originations increased 40% to $12.9 billion as compared to $9.3 billion in 2015.  In 2016, retail originations were the main driver of total originations representing 75% or $9.7 billion of total originations.  Additionally, in 2016, retail originations had a 74% increase over 2015 retail originations.  For the fourth quarter of 2016, the Company’s total originations increased to $3.1 billion, a 60% increase as compared to $1.9 billion for the fourth quarter of 2015. As of December 31, 2016, our locked pipeline, which represents mortgages we expect to close in the near future, had decreased to $558.5 million, a slight decrease from December 31, 2015.  This decrease was primarily caused by the recent increase in interest rates which resulted in decreased refinance originations. During the fourth quarter of 2016, we increased the carrying value of our long-term debt by $7.4 million due to our improved financial condition as evidenced by better profitability and the successful public offering in the third quarter of 2016, as discussed below. The contingent consideration liability represents the estimated fair value of the expected future earn-out payments to be paid to the seller of the CCM operations, acquired in the first quarter of 2015.  The earn-out period ends at the end of 2017.  In the fourth quarter of 2016, we updated assumptions based on current market conditions, resulting in a decrease in projected volumes of CCM and, in turn, a slightly lower estimated value of the contingent consideration due to the seller of CCM. As a result, we recorded a change in the fair value of the contingent consideration in the fourth quarter decreasing the contingent consideration liability by $4.4 million over the remaining earn-out period of four quarters.  As required by GAAP, it resulted in a corresponding increase to earnings of $4.4 million in the fourth quarter of 2016. In 2016, the Company was successful in its objective to start restructuring its balance sheet.  In January of 2016, the Company exercised its option to convert a portion of its debt into common stock, increasing its book value by $20 million. Additionally, during 2016, the Company raised approximately $5 million through an "At the Market Transaction" or “ATM”, as an opportunistic and accretive way to raise capital.  In September 2016, the Company completed a successful over-subscribed public offering, providing net proceeds to the Company of approximately $42.6 million.  Lastly, in February 2017, the Company paid off its $30 million working line of credit and replaced it with an MSR financing facility, an annualized savings $1.35 million and a 450 bps improvement to its cost of funds.  The Company will seek to continue to restructure its balance sheet in an accretive manner during 2017. Mr. Joseph Tomkinson, Chairman and CEO of Impac Mortgage Holdings, Inc., commented, “2016 proved to be our best year in over a decade, surpassing our projections with nearly $100 million of Adjusted Operating Income and $13 billion in total originations. With our strong loan retention capabilities, we were able to take advantage of the low interest rate environment and create a low weighted average coupon servicing portfolio.  As a result of the current rising rate environment, our servicing portfolio continues to increase in value and generate larger amounts of servicing income.  This strategy was the core reason for our third quarter capital raise, and we are pleased to be executing this strategy successfully.  In 2017, we expect that a rising rate environment will allow us to substantially grow our NonQM originations, continue to diversify our product offerings, and take advantage of the consolidation that is anticipated in the mortgage lending industry.” This release contains operating income excluding changes in contingent consideration (Adjusted Operating Income) and per share as performance measures, which are considered non-GAAP financial measures, to further aid our investors in understanding and analyzing our core operating results and comparing them among periods.  Adjusted Operating Income and Adjusted Operating Income per share exclude certain items that we do not consider part of our core operating results. These non-GAAP financial measures are not intended to be considered in isolation or as a substitute for net earnings before income taxes, net earnings or diluted EPS prepared in accordance with GAAP.  The table below shows operating income per share excluding these items: (1)  Includes the add back of interest expense on the convertible notes, net of tax used to calculate diluted earnings using the if-converted method. The Company will hold a conference call on February 24, 2017, at 9:00 a.m. Pacific Time (12:00 p.m. Eastern Time) to discuss the Company’s financial results and business outlook and to answer investor questions. After the Company’s prepared remarks, management will host a live Q&A session.  To submit questions via email, please email your questions to Justin.Moisio@ImpacMail.com.  Investors may participate in the conference call by dialing (844) 265-1560, conference ID number 74667184, or access the web cast via our web site at http://ir.impaccompanies.com. To participate in the conference call, dial in 15 minutes prior to the scheduled start time. The conference call will be archived on the Company's web site at http://ir.impaccompanies.com. This press release contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements, some of which are based on various assumptions and events that are beyond our control, may be identified by reference to a future period or periods or by the use of forward looking terminology, such as “may,” “capable,” “will,” “intends,” “believe,” “expect,” “likely,” “potentially”  ”appear,” “should,” “could,” “seem to,” “anticipate,” “expectations,” “plan,” “ensure,” or similar terms or variations on those terms or the negative of those terms. The forward-looking statements are based on current management expectations. Actual results may differ materially as a result of several factors, including, but not limited to the following:  failure to achieve the benefits expected from the acquisition of the CCM operations, including an increase in origination volume generally, increase in each of our origination channels and ability to successfully use the marketing platform to expand volumes of our other loan products; successful development, marketing, sale and financing of new and existing financial products, including expansion of non-Qualified Mortgage originations and conventional and government loan programs; ability to successfully diversify our mortgage products; volatility in the mortgage industry; unexpected interest rate fluctuations and margin compression; our ability to manage personnel expenses in relation to mortgage production levels; our ability to successfully use warehousing capacity; increased competition in the mortgage lending industry by larger or more efficient companies; issues and system risks related to our technology; ability to successfully create cost and product efficiencies through new technology; more than expected increases in default rates or loss severities and mortgage related losses; ability to obtain additional financing through lending and repurchase facilities, debt or equity funding, strategic relationships or otherwise;  the terms of any financing, whether debt or equity, that we do obtain and our expected use of proceeds from any financing; increase in loan repurchase requests and ability to adequately settle repurchase obligations; failure to create brand awareness; the outcome, including any settlements, of litigation or regulatory actions pending against us or other legal contingencies; and our compliance with applicable local, state and federal laws and regulations and other general market and economic conditions. For a discussion of these and other risks and uncertainties that could cause actual results to differ from those contained in the forward-looking statements, see the annual and quarterly reports we file with the Securities and Exchange Commission. This document speaks only as of its date and we do not undertake, and specifically disclaim any obligation, to release publicly the results of any revisions that may be made to any forward-looking statements to reflect the occurrence of anticipated or unanticipated events or circumstances after the date of such statements. Impac Mortgage Holdings, Inc. (IMH or Impac) provides innovative mortgage lending and warehouse lending solutions, as well as real estate solutions that address the challenges of today’s economic environment.  Impac’s operations include mortgage and warehouse lending, servicing, portfolio loss mitigation and real estate services as well as the management of the securitized long-term mortgage portfolio, which includes the residual interests in securitizations. For additional information, questions or comments, please call Justin Moisio, VP Business Development & Investor Relations at (949) 475-3988 or email Justin.Moisio@ImpacMail.com. Web site: http://ir.impaccompanies.com or www.impaccompanies.com.

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