Real Estate Central

IRVINE, Calif., May 20 /PRNewswire-FirstCall/ — Impac Mortgage
Holdings, Inc. (NYSE: IMH) (”IMH” or the “Company”), a real estate
investment trust (”REIT”), reports a net loss of $(2.0) billion, or
$(27.10) per diluted common share for 2007, as compared to a net loss of
$(75.3) million, or $(1.18) per diluted common share for 2006. The net loss
was primarily the result of a $1.4 billion provision for loan losses as a
result of deteriorating market conditions, higher delinquencies and higher
severities.

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Estimated taxable loss available to common stockholders for 2007 was
$(136.0) million or $(1.79) per diluted common share, as compared to
estimated taxable income of $79.5 million or $1.05 per diluted common share
for 2006. As a REIT, we pay dividends to our stockholders based on
estimated taxable income. For differences between net (loss) earnings as
determined by generally accepted accounting principles (”GAAP”) and
estimated taxable income, please refer to the enclosed reconciliation
schedule. The Company has filed its Form 10-K with the Securities Exchange
Commission (”SEC”) which includes additional financial information for
2007. The Company’s Form 10-K is also available on our web site at
http://www.impaccompanies.com under stockholder relations.

Market Conditions

The mortgage market faced adversity during the second half of 2007 as
the continued broad repricing of mortgage credit risk led to a severe
contraction in market liquidity. Furthermore, the market has continued to
try to quantify the ultimate loss rates that are going to be experienced in
asset backed securities.

Conditions in the secondary markets (the markets in which we sell and
securitize mortgage loans), which dramatically worsened during the third
quarter, continue to be depressed as investor concerns over credit quality
and a weakening of the United States housing market have remained high. As
a result, the capital markets remain very volatile and illiquid and have
effectively been unavailable to the Company. The Company believes the
existing conditions in the secondary markets are unprecedented since the
Company’s inception and, as such, inherently involve significant risks and
uncertainty. These conditions could continue to adversely impact the
performance of our long-term investment portfolio. Until bond spreads and
credit performance return to more historical levels, it will be impossible
for the Company to execute securitizations and loan sales. As a result, in
the second half of 2007, the Company was forced to further alter its
business strategies and discontinue its correspondent, retail, wholesale
and commercial mortgage operations as well as the warehouse lending
operations, in response to the market conditions.

We believe several converging factors led to the broad repricing,
including general concerns over the decline in home prices, the rapid
increase in the number of delinquent Alt-A loans, the reduced willingness
of investors to acquire commercial paper backed by mortgage collateral, the
resulting contraction in market liquidity and availability of financing
lines, the numerous rating agency downgrades of securities, and the
increase in supply of securities potentially available for sale.

The downward spiral of negative pricing adjustments on assets had a
compounding effect as lower prices led to increased lender margin calls for
some market participants, which in turn, forced additional selling, causing
yet further declines in prices. These events continued to multiply
throughout much of the year.

Normal market trading activity during the second half of 2007 was
unusually light as uncertainty related to future loss estimates made it
difficult for willing buyers and sellers to agree on price. This condition
was particularly acute with respect to securities backed by 2006 and 2007
Alt-A loans where market participants were setting price levels based on
widely varied opinions about future loan performance and loan loss
severity. While the early credit performance for these securities has been
clearly far worse than initial expectations, the ultimate level of realized
losses will largely be influenced by events that will likely unfold over
the next several years, including the severity of housing price declines
and the overall strength of the economy.

Liquidity

The Company has taken steps to reduce operating costs, including
reducing staff and lease costs, to a level at which the cash flows from the
long-term mortgage portfolio and its master servicing portfolio could
support the Company’s ongoing operations. The Company continues to re-size
the organization to a level more in line with its ongoing operations. Once
the Company is able to reduce the uncertainty surrounding the remaining
reverse repurchase and warehouse line and repurchase reserves in
discontinued operations, the Company should be able to meet its liquidity
needs from cash flows generated from the long-term mortgage portfolio and
its master servicing fees. The Company is in negotiations to convert the
reverse repurchase line with an outstanding balance of $318.7 million at
December 31, 2007, to a note. In an effort to maintain capital, the Company
did not declare a cash dividend on our common stock subsequent to the first
quarter of 2007.





Year End 2007 vs. Year End 2006 Net Loss

For the Year Ended December 31,
Increase %
2007 2006 (Decrease) Change
Interest income $1,224,821 $1,134,002 $90,819 8%
Interest expense 1,179,015 1,196,199 (17,184) (1)
Net interest income
(expense) 45,806 (62,197) 108,003 174
Provision for loan losses 1,390,008 34,600 1,355,408 3,917
Net interest income
(expense) after
provision for loan
losses (1,344,202) (96,797) (1,247,405) (1,289)
Total non-interest income (269,553) 113,566 (383,119) (337)
Total non-interest expense 25,096 22,318 2,778 12
Income tax expense
(benefit) 14,861 (13,597) 28,458 209
Net (loss) earnings
from continuing
operations (1,653,712) 8,048 1,661,760 20,648
Loss from discontinued
operations, net (393,378) (83,321) (310,057) (372)
Net loss $(2,047,090) $(75,273) $1,971,817 2,620%

Net loss per share -
diluted $(27.10) $(1.18) $(25.91) (2,192)%
Dividends declared per
common share $0.35 $0.95 $(0.60) (63)%



Selected Financial Results for 2007

Continuing Operations
— Net Loss of $1.7 billion for 2007 compared to net income of $8.0
million for 2006.

— Estimated taxable (loss) per diluted common share was ($1.79) for 2007
as compared to actual taxable income per diluted common share of $1.05
for 2006. See the “Estimated Taxable Income available to IMH Common
Stockholders” table for the calculation of estimated taxable income.

— Provision for loan losses was $1.4 billion for 2007 compared to $34.6
million for 2006.

— REO charge offs were

81.3 million for 2007 compared to

4.7 million
for 2006.

— The long-term investment operations retained approximately $3.0
billion of primarily Alt-A mortgages and

34.9 million commercial
mortgages compared to $5.3 billion and $526.6 million, respectively,
for 2006.


Discontinued Operations
— Net Loss of $393.4 million for 2007 compared to a loss of $83.3
million for 2006.

— Provision for repurchase was $34.7 million for 2007 compared to $7.4
million for 2006.

— Reverse repurchase agreements were $336.7 million for 2007 compared to
$1.7 billion for 2006.

— Mortgages held-for-sale were

79.7 million, including a fair value
adjustment of $118.4 million for 2007 compared to mortgages held-for-
sale of $1.6 billion, including an $18.7 million fair value adjustment
at December 31, 2006.

— The mortgage operations acquired or originated approximately $4.1
billion of primarily non-conforming Alt-A mortgages during 2007, as
compared to $11.6 billion for 2006.

— The commercial operations originated approximately $0.4 billion of
commercial and multifamily loans during 2007, as compared to $1.0
billion acquired or originated by the REIT in 2006.


Estimated Taxable Income
Because dividend payments are based on estimated taxable income,
dividends may be more or less than net earnings. As such, we believe that
the disclosure of estimated taxable income available to common
stockholders, which is a non-generally accepted accounting principle, or
“non-GAAP,” financial measurement, is useful information for our investors.
Based on current tax estimates, all of the 2007 dividends may be a return
of capital. Additionally, losses recorded for GAAP, generally are reflected
as losses in taxable income in subsequent periods.

The following table presents a reconciliation of net (loss) earnings
(GAAP) to estimated taxable income available to common stockholders for the
periods indicated (in thousands, except per share amounts):





For the year ended December 31,
2007 (1) 2006 2005
Net (loss) earnings $(2,047,090) $(75,273)

70,258
Adjustments to net (loss) earnings:(2)
Loan loss provisions (3) 1,467,074 43,054 30,563
Tax deduction for actual loan losses (3) (280,195) (27,157) (16,004)
GAAP earnings on REMICs (4) (51,198) (16,822) -
Taxable income on REMICs (5) 224,879 34,297 -
Change in fair value of derivatives(6) 251,875 114,490 (155,695)
Dividends on preferred stock (14,886) (14,698) (14,530)
Net loss (earnings) of taxable REIT
subsidiaries (7) 310,542 25,994 (14,968)
Dividend from taxable REIT
subsidiaries (8) - 7,400 32,850
Elimination of inter-company loan
sales transactions (9) (27,437) (11,913) 10,429
Non deductible capital loss on
security available-for-sale (10) 29,022 - -
Miscellaneous adjustments 1,434 166 -
Estimated taxable income (loss)
available to common stockholders’ (11) $(135,980) $79,538 $142,903
Estimated taxable income (loss) per
diluted common share (11) $(1.79) $1.05 $1.87
Diluted weighted average common
shares outstanding 76,096 76,106 76,277

1. Estimated taxable income (loss) includes estimates of book to tax
adjustments and can differ from actual taxable income as calculated
when we file our annual corporate tax return. Since estimated taxable
income (loss) is a non-GAAP financial measurement, the reconciliation
of estimated taxable income (loss) available to common stockholders to
net earnings (loss) is intended to meet the requirements of Regulation
G as promulgated by the SEC for the presentation of non-GAAP financial
measurements. To maintain our REIT status, we are required to
distribute a minimum of 90% of our annual taxable income to our
stockholders.
2. Certain adjustments are made to net earnings in order to calculate
estimated taxable income due to differences in the way revenues and
expenses are recognized under the two methods.
3. To calculate estimated taxable income, actual loan losses are
deducted. For the calculation of net earnings, GAAP requires a
deduction for estimated losses inherent in our mortgage portfolios in
the form of a provision for loan losses, which are generally not
deductible for tax purposes. Therefore, as the estimated losses
provided for GAAP are realized, the losses will negatively and may
materially impact future taxable income. The loan loss provisions
include the allowance for loan loss provision and the REO loan loss
provision for the REIT.
4. Includes GAAP amounts related to the REMIC securitizations, which were
treated as secured borrowings for GAAP purposes and sales for tax
purposes. The REMIC GAAP income excludes the provision for loan losses
recorded that may relate to the REMIC collateral included in
securitized mortgage collateral. The Company does not have any
specific valuation allowances recorded as an offset to the REMIC
collateral.
5. Includes amounts that are taxable to the Company related to its
residual interest in the securitizations, as the REMICs are accounted
for as sales in its tax filings.
6. The mark-to-market change for the valuation of derivatives at IMH is
income or expense for GAAP financial reporting but is not included as
an addition or deduction for taxable income calculations until
realized.
7. Represents net earnings of IFC and ICCC, our taxable REIT subsidiaries
(TRS), which may not necessarily equal taxable income.
8. Any dividends paid to IMH by the TRS in excess of their cumulative
undistributed taxable income would be recognized as return of capital
by IMH to the extent of IMH’s capital investment in the TRS.
Distributions from the TRS to IMH may not equal the TRS net earnings,
however, IMH can only recognize dividend distributions received from
the TRS as taxable income to the extent that the TRS distributions are
from current or prior period undistributed taxable income. Any
distributions by the TRS in excess of IMH’s capital investment in the
TRS would be taxed as capital gains.
9. Includes the effects to taxable income associated with the elimination
of gains from inter-company loan sales and other intercompany
transactions between IFC, ICCC, and IMH, net of tax and the related
amortization of the deferred charge.
10. This amount includes a non deductible loss for an other than temporary
impairment on certain securities classified as available-for-sale. It
is expected that this loss will be realized in a subsequent period.
11. Excludes the deduction for common stock dividends paid and the
availability of a deduction attributable to net operating loss carry-
forwards. As of December 31, 2007, the Company had estimated federal
net operating loss carry-forwards of $152.4 million that expire in the
year 2020.


Year End 2007 vs. Year End 2006
Estimated taxable income available to common stockholders decreased

15.5 million for the year-ended 2007 as compared to decreases of $63.4
million for 2006. The decline in estimated taxable income was mainly
attributable to:



— an increase in loan losses of

53.0 million, as a result of an
increase in REO additions, coupled with an increase in loss
severities, due to the glut of real estate for sale in the
marketplace;

— the warehouse operations recognized a $60.0 million loss as a result
of satisfying the mortgage operations obligations with the underlying
collateral. The $60.0 million loss is the difference between the fair
value of the mortgage loans transferred from the taxable reit
subsidiary (mortgage operations) and the carrying value of the finance
receivable recorded by the warehouse lending operations; also,

— a $190.6 million increase in taxable income from the retained
interests in the REMIC securitizations, which was attributable to
higher cash receipts from REMICs as the Company added three REMIC
securitizations in the fourth quarter of 2006 and three in the first
half of 2007. Taxable income from securitizations, treated as a sale
for tax purposes, are generally higher in the first 12 months
following the securitization as there are few realized tax losses,
until foreclosures are liquidated; additionally,

— Collateralized mortgage obligations (CMOs) generated $95.4 million in
additional net interest income primarily due to slower prepayment
speeds which reduced the net amortization costs by $118.5 million.
However, these slower prepayments also reduced prepayment penalty fees
received by $31.3 million.

Year End 2007 Earnings Conference Call The Company has announced a
conference call and live web cast on Wednesday, May 21, 2008 at 8:00 a.m.
Pacific Time (11:00 a.m. Eastern Time). We will discuss results of
operations for 2007 and provide a general update on current trends followed
by a question and answer session. If you would like to participate in the
conference call, you may listen by dialing (800) 350-9149, conference ID
number 47663063, or access the web cast via our web site at
http://www.impaccompanies.com. To participate in the conference call, dial
in fifteen minutes prior to the scheduled start time. The call will also be
archived through May 30, 2008. To listen to the archived call dial (800)
642-1687 or (706) 645-9291, conference call ID 47663063. The conference
call will also be archived on the Company’s web site at
http://www.impaccompanies.com and can be accessed by linking to Stockholder
Relations/ Presentations/Audio Archives. You can subscribe to receive
instant notification of conference calls, new releases and the monthly
unaudited fact sheet by using our e-mail alert feature located at the web
site under Stockholder Relations/ Contact Us/Email Alerts.

Forward-Looking Statements

This press release contains certain forward-looking statements within
the meaning of Section 27A of the Securities Act of 1933 and Section 21E of
the Securities Exchange Act of 1934. Forward-looking statements, some of
which are based on various assumptions and events that are beyond our
control, may be identified by reference to a future period or periods or by
the use of forward-looking terminology, such as “may,” “will,” “believe,”
“expect,” “likely,” “should,” “could,” “anticipate,” or similar terms or
variations on those terms or the negative of those terms. The
forward-looking statements are based on current management expectations.
Actual results may differ materially as a result of several factors,
including, but not limited to our ability to successfully manage through
the current market environment; ability to meet liquidity needs from cash
flows generated from the long-term mortgage portfolio and master servicing
fees; our ability to reduce expenses from our discontinued operations; our
ability to sell our remaining mortgages; failure to sell, or achieve
expected returns on sale of, negotiated loan sales, including
non-performing loans, in the secondary market due to market conditions,
lack of interest or ineffectual pricing; inability to effectively liquidate
properties through auction process or otherwise; unexpected increases in
our loan repurchase obligations; inability to implement strategies
effectively to increase cure rates, reduce delinquencies or mitigate losses
on mortgage loans; changes in assumptions regarding estimated loan losses
or fair value amounts; increase in default rates on our mortgages;
inability to continue existing reverse repurchase facility or obtain other
financing on acceptable terms; ability to continue as a going concern as a
result of deteriorating market conditions causing further losses on
mortgage loans; ability to continue to pay dividends on outstanding
preferred stock; the ability of our common stock and Series B and C
preferred stock to continue trading in an active market; the loss of
executive officers and other key management employees; our ability to
maintain effective internal control over financial reporting and disclosure
controls and procedures; the adoption of changes of new laws that affect
our business or the business of people with whom we do business; interest
rate fluctuations on our assets that differ from our liabilities; the
outcome of litigation or regulatory actions pending against us or other
legal contingencies; our compliance with applicable local, state and
federal laws and regulations and other general market and economic
conditions.

For a discussion of these and other risks and uncertainties that could
cause actual results to differ from those contained in the forward-looking
statements, see “Risk Factors” and “Management’s Discussion and Analysis of
Financial Condition and Results of Operations” in the Company’s Annual
Report on Form 10-K for the period ended December 31, 2007. This press
release speaks only as of its date and we do not undertake, and
specifically disclaim any obligation, to publicly release the results of
any revisions that may be made to any forward-looking statements to reflect
the occurrence of anticipated or unanticipated events or circumstances
after the date of such statements.

About Impac Mortgage Holdings, Inc.

Impac Mortgage Holdings, Inc. is a mortgage REIT, which through its
Long Term Investment Operations is primarily invested in non-conforming Alt
A mortgage loans (Alt-A) and to a lesser extent small balance commercial
and multi-family loans. The Company is organized as a REIT for tax
purposes, which generally allows it to pass through earnings to
stockholders without federal income tax at the corporate level.

For additional information, questions or comments, please call Justin
Moisio in Investor Relations at (949) 475-3988 or email
jmoisio@impaccompanies.com. Web site: http://www.impaccompanies.com



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• LandAmerica to Combine Residential Services with Lender Services
• Golf Community Debuts New Golf Clubhouse for Its Members

Source: Real Estate Newswire