We originate and purchase loans on the basis of the borrower’s ability to repay the mortgage loan, the borrower’s historical pattern of debt repayment and the amount of equity in the borrower’s property (as measured by the borrower’s loan-to-value ratio, or LTV). We have been originating and purchasing loans since 1996 and believe we have developed a comprehensive and sophisticated process of credit evaluation and risk-based pricing that allows us to effectively manage risk.

We originate and purchase loans through our wholesale network of approximately 35,000 independent mortgage brokers and through our retail network of 216 sales offices operating in 35 states, and 34 regional processing centers operating in 17 states. Although a significant percentage of our loans are originated in California, we are authorized to do business in all 50 states and regularly originate and purchase loans throughout the country.  Additionally, we employ approximately 7,500 Associates.

We originate approximately 90 percent of our loans through our wholesale channel and 10 percent through our retail channel. Of the loans that we originate, approximately 60 percent are refinances of existing mortgages and 40 percent are for the purchase of residential property. Of the refinance transactions, 85 percent were cash-out refinances in which the borrower receives additional proceeds to pay off other debt or meet other financial needs.

We have a secondary marketing strategy where we sell approximately 80 percent of our loans for cash in the whole loan market and hold the remaining 20 percent of our production for investment through on-balance sheet securitizations. This secondary marketing strategy provides greater stabilization of earnings going forward.

On October 1, 2004, we converted into a REIT, which we believe we will put us in a better position to achieve our long-term growth objectives, diversify our revenues in a more tax-efficient manner and increase stockholder value.