Impac Eyes Title Insurer,Mortgages

“I didn’t sleep at that time,” said Joseph Tomkinson, Impac’s chairman and chief executive. “And I can say the same for (President) Bill Ashmore, because a lot of the time we would call each other at four in the morning.”

A long nightmare seems to be easing for the Irvine-based company, which is starting to hire again with plans to get into mortgage lending and other businesses.

Impac was one of the bigger employers in Orange County when it peaked at slightly more than 1,200 employees two years ago.

At the time, Impac acquired home loans from brokers that were made to people with imperfect credit or less than complete documentation. Impac held the mortgages as investments.

Impac focused on what are known as Alt-A borrowers—those in between the riskiest subprime borrowers and those with the best credit.

The early 2007 collapse of Irvine-based subprime lender New Century Financial Corp. sparked an industry crash that saw financiers pull funding for Impac and others.

“If you lose your funding like that, there’s not a whole lot you can do,” said one Wall Street analyst who asked not to be named because he no long covers Impac. “Essentially that’s what happened to them—they had to downsize pretty materially.”

By the end of 2008, Impac had shrunk to about 110 employees. Its prestigious New York Stock Exchange listing was pulled.

Impac now trades on the low-profile Pink Sheets exchange with a recent market value of about $15 million, down from a peak of $1.3 billion in mid-2005.

Executives shut down the company’s Florida and Chicago offices and sublet five of the seven floors of the company’s 200,000-square-foot local headquarters near John Wayne Airport.

The prospect of bankruptcy was real for Impac. But Tomkinson said he and Ashmore vowed to avoid it.

“Bill and I, two years ago, we sat down across from each other at a table, and we said, ‘Lets just gut this out, get it right and we’ll come out of it on the other end,’” Tomkinson said.

The company wound down its credit lines and began selling chunks of the $850 million in loans that it had on its books.

For the past two years, Impac largely has survived by collecting payments and handling other administrative work for mortgages it once owned, as well as providing other real estate-related services.

Growth

At about 250 workers now, Impac is looking to add another 30 people across the board from now until the end of the year, according to Tomkinson.

Impac even has stopped subleasing one of the floors at its headquarters, which has been known as Impac Center since 2005.

“You don’t build a company unless it’s cash flowing, and it’s cash flowing again,” Tomkinson said.

To grow, he said it is looking to acquire an undisclosed title insurance company, which would put it into an industry that’s undergone consolidation in the past year and is dominated by Santa Ana-based First American Corp. and Florida’s Fidelity National Information Services Inc.

The company said it expects the California Department of Insurance to approve its acquisition of a title company any time now.

Impac’s also gearing up to start making mortgages directly to borrowers, something it flirted with during the lending boom.

The company’s in talks for a line of credit it hopes to get before year’s end that will allow it to start making loans in 2010.

Impac plans to focus on simple mortgages that fit standards set by federally backed buyers of mortgages such as Fannie Mae, Freddie Mac and the Federal Housing Authority.

Much of that business now is dominated by the big banks that picked up the pieces of the mortgage meltdown.

“It’s a tough business to just originate to the government standards because there are gigantic companies doing that and the competition is pretty intense,” said the analyst who once followed Impac.

Impac is close to getting $160 million worth of loans off its books, the last trace of the mortgage investing that led to its downfall.

“We’re a little Orange County company that without any government help is re-emerging,” Tomkinson said. “And all those predictions that we’re going bankrupt, that wasn’t an option as far as I was concerned.”

Shvartsman is a freelance writer based in Irvine.