Mortgage REITs Suffer in Tough Times.

NEW YORK -- A pair of mortgage real estate investment trusts reported losses for the fourth quarter, continuing the trend of a number of firms which have adopted this structure, especially those who specialize in nonprime originations.

The companies are Impac Mortgage Holdings Inc., Irvine, Calif., and HomeBanc Corp., Atlanta. HomeBanc recently let go of its chairman and chief executive Patrick S. Flood and replaced him with Kevin Race as president and chief executive and James Witherow as chairman.

HomeBanc reported a GAAP net loss of $10.7 million ($0.18 per share) for the fourth quarter, compared with GAAP net earnings of $348,000 ($0.01 per share) for the same period a year earlier.

Mr. Race said the company had a GAAP net operating loss of $6.3 million for the period, but the company had to record a net tax expense instead of a net tax benefit for the quarter. "The fourth-quarter tax expense is the result of an increase in the valuation allowance previously established to reduce the net deferred tax asset at Dec. 31, 2006 to an amount we currently believe is likely to be realized.

For the year, HomeBanc had a GAAP net loss of just under $11 million ($0.20 per share), an improvement over the GAAP net loss of $11.6 million ($0.21 per share) in 2005.

Meanwhile, the company has begun to implement its 2007 strategic plan. Previously, it had said it would be reducing its Georgia and Florida operations and instead look to move into new markets. It will open a store in April in Nashville, and two more in undisclosed locations later this year.

Mr. Race noted it closed five of its 10 Georgia production offices and two of its nine Florida production offices, adding he believed it would generate $3.8 million of savings in 2007. The company is also working on how to implement its intentions to give up its real estate investment trust status. Mr. Flood had said HomeBanc was looking to de-REIT back in November of 2006.