An upcoming acquisition by Impac Mortgage Holdings Inc. will yield significant tax benefits, increase originations and supercharge its centralized lending strategy.
An announcement Thursday said that subsidiary Impac Mortgage Corp. has agreed to acquire the mortgage operations of CashCall Inc.
The acquired business will operate the CashCall Mortgage division of Impac.
No price was disclosed, but Irvine, Calif.-based Impac said that the deal has been structured with a significant contingent component.
Anaheim, Calif.-based CashCall, which is reportedly licensed in 11 states, came to Impac’s attention as a correspondent client.
“CashCall’s overall loan performance and delivery has reinforced Impac’s decision to complete the acquisition,” the statement said.
Impac expects significant tax benefits from the transaction because its tax loss carry forwards will offset net profits from CashCall.
Impac reported $0.924 billion in third quarter mortgage originations, while CashCall reportedly closed $0.800 billion during the fourth quarter.
For all of 2013, Impac’s production was $2.549 billion. Although CashCall originated $6.5 billion that same year, its business slowed in late 2013 and it laid off nearly 770 employees.
In 2013, Impac abandoned its brick-and-mortar operations in favor of centralized lending structure and sold off 23 retail branches as well as a fulfillment center.
The CashCall acquisition builds on that strategy by adding a centralized retail call center where loan applications are received and taken by loan agents directly from consumers and through the Internet.
In addition to the call center, the assets being picked up in the transaction include a customized loan origination system and integrated lead management technology.
Operations won’t change, and CashCall mortgage employees are being hired by Impac.
“Impac believes that the centralized call center operations, combined with this technology, makes CashCall Mortgage a scalable retail origination platform that is able to close loans faster than competitors in a highly efficient manner,” the news release said. “According to the Mortgage Bankers Associations’ third-quarter 2014 performance report, CashCall would rank among one of the most efficient retail originators, closing on average over four loans per production employee as compared to the MBA average of 2.1 loans and over 13 closed loans per sales employee compared to MBA averages of 5.3 loans.”
CashCall Inc. was founded was founded in 2000 by J. Paul Reddam, who also founded Ditech Funding Corp. in January 1995 and subsequently sold it to GMAC Mortgage.
