Origen's credit market woes could lead to sale of the company

By Lisa Kerner

Charlotte, N.C., March 14 - Origen Financial, Inc. recorded a non-cash goodwill impairment charge of $32.3 million in its fourth quarter ended Dec. 31 and sold an asset-backed bond. Turmoil in the credit market was to blame.

According to a company news release, Origen had credit facilities structured as repurchase agreements backed by four asset-backed bonds. Origen sold one of its asset-backed bonds in February for $22.5 million to "eliminate pressure from its lender."

Proceeds from the sale of the bond were used to retire all debt under repurchase agreements secured by the bond as well as three others that the company continues to hold, the release said.

Without the non-cash impairment charge and the sale of the bond, Origen said it earned $9.7 million for 2007.

Origen must also sell the loans currently on its warehouse line to pay off its warehouse facility, which has an outstanding loan balance of some $146.4 million and was set to expire on Friday.

The company said it is suspending originating loans until the securitization and whole loan markets recover. However, Origen will continue to provide its third-party loan origination services.

Origen's lender has agreed to extend the due date of its supplemental advance residual facility to June 13. The facility, with $50 million outstanding, was also set to expire on Friday.

In light of the current conditions, Origen's board of directors is considering:

• Continuing the company's business, pared down to its third-party fee business and management of its $1 billion loan portfolio;

• Selling certain company assets; or

• Selling the entire company.

"Despite the extreme market difficulties we faced last year, we were nevertheless able to increase our overall originations, complete two successful securitizations, and our portfolio performance has been exceptional," chief executive officer Ronald A. Klein said in the release.

"In 2007, we had record low default rates, record low charge-offs, record low delinquencies, and record high recovery rates," Klein added.

Klein noted that Origen has been subjected to margin calls and market value adjustments on its credit facilities despite the company's excellent loan performance.

Southfield, Mich.-based Origen is a real estate investment trust that originates and services manufactured housing loans.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.