I'm also confused. I've been led to believe that the Long-Term Mortgage Portfolio is a non-recourse asset against IMH's balance sheet. and that the performance of the Portfolio is a GAAP number not a cash number. Supposedly, the only skin in the game that IMH had in the LTMP was tthe residual interest which at the end of the 1st quarter was at about 15-25 million.
Need to look at the full financial statement to sniff this out. I do recall the old senile guy that held the Q1 conference call making a statement that the portfolio had shrunk to the point that the write-downs should be behind us. Obviously they were not.
Management has no credibility with me at this point. It is irrelevant that there is a new person conduction the conference calls.
That said, the profit potential of IMH is huge.
Also sounds like they over-expanded headcount and laid off workers as the market turned down.
Not much to feel good about on this conference call that was not mishandled.
Perhaps we need to lock management in a room and have them slip messages under the door.
"Long-term Mortgage Portfolio
The estimated fair value of the net trust securitization assets continues to decline in 2013 primarily as a result of the expected and ongoing decline in securitized mortgage collateral due to principal collections and liquidation of defaulted loans."
I'm not sure how to measure the magnitude of future declines from this paragraph.
I think they made a good comeback from the 1st quarter - especially with the sudden interest rate increase in June. The long term mortgager porttfolio will be fully written off at some point. Excluding that and discontinued operations loss, they blew it away - roughly .85 earnings times 4 = 3.40 / share earnings annualized. Times conservative PE of 8 = $27 share price fair value, with future growth as housing market comtinues to recover and they expand on their services and programs. Look how far they have come from a couple years ago.
So there are two opposing forward guidances in this report. The ominous one was that the mortgage originations fell in June 2013, which by itself would probably have them break support and sell off. But the interesting counter-balance to that was their saying they are going to start warehouse lending, and further that they are very upbeat about that and feel they have real experience and prior success in that area. Their vague discussion around that suggested the warehouse lending will more than compensate for the decline in mortgage origination margins and volumes.
How do others feel about the warehouse lending and how might it affect the earnings going forward. Can anyone guess on cents per share of future quarterly earnings attributable to warehouse?