##### Table of Contents



SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C.
 FORM 10-Q
 þ
    
    Quarterly report pursuant to Section 13 or 15 (d) of the Securities Exchange Act of 1934
 FOR THE QUARTERLY PERIOD ENDED June 30, 2006.
 OR
 o
    
    Transition report pursuant to Section 13 or 15 (d) of the Securities Exchange Act of 1934
 For
the Transition Period From  to
 COMMISSION FILE NUMBER 000-50721
 Origen Financial, Inc.
  Delaware
(State of Incorporation)
    
    20-0145649
(I.R.S. Employer Identification No.)27777 Franklin Rd.
Suite 1700
Southfield, MI
(Address of Principal Executive Offices)
    
    48034
(Zip Code)
  þ o
  o þ o
 o þ




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##### 



Origen Financial, Inc.
 Index
  
 PagePart I Financial InformationItem 1.
    
    Financial Statements (Unaudited)Consolidated Balance Sheets as of June 30, 2006 and
December 31, 2005
    
    
    3Consolidated Statements of Earnings for the periods
ended June 30, 2006 and 2005
    
    
    4Consolidated Statements of Comprehensive Income (Loss) for the periods
ended June 30, 2006 and 2005
    
    
    5Consolidated Statements of Cash Flows for the six months
ended June 30, 2006 and 2005
    
    
    6Notes to Consolidated Financial Statements
    
    
    7Item 2.
    
    Managements Discussion and Analysis of Financial Condition
and Results of Operations
    
    
    18Item 3.
    
    Quantitative and Qualitative Disclosures about Market Risk
    
    
    29Item 4.
    
    Controls and Procedures
    
    
    31Part II Other InformationItem 6.
    
    Exhibits and Reports on Form 8-K
    
    
    31Signatures
    
    
    33Certification of Chief Executive Officer by Rule 13a-14(a)Certification of Chief Financial Officer by Rule 13a-14(a)Certification of CEO and CFO by Rule 13a-14(b)
  2




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Part I. Financial Information
 
 Item 1. Financial Statements
 Origen Financial, Inc.
 
 Consolidated Balance Sheets
 (In thousands, except share data)
 June 30, 2006 and December 31, 2005
 June 30,
    
    
    December 31,2006
    
    
    2005(Unaudited)ASSETSAssetsCash and cash equivalents
    
    $
    1,641
    
    
    $
    8,307Restricted cash
    
    
    14,094
    
    
    
    13,635Investments held to maturity
    
    
    41,543
    
    
    
    41,914Loans receivable, net of allowance for losses of $8,779 and
$10,017, respectively
    
    
    856,927
    
    
    
    768,410Furniture, fixtures and equipment, net
    
    
    3,381
    
    
    
    3,558Goodwill
    
    
    32,277
    
    
    
    32,277Other assets
    
    
    27,365
    
    
    
    24,902Total assets
    
    $
    977,228
    
    
    $
    893,003LIABILITIES AND STOCKHOLDERS EQUITYLiabilitiesWarehouse financing
    
    $
    190,189
    
    
    $
    65,411Securitization financing
    
    
    534,346
    
    
    
    578,503Repurchase agreements
    
    
    23,582
    
    
    
    23,582Notes payable  servicing advances
    
    
    781
    
    
    
    2,212Other liabilities
    
    
    22,360
    
    
    
    23,344Total liabilities
    
    
    771,258
    
    
    
    693,052Stockholders EquityPreferred stock, $.01 par value, 10,000,000 shares authorized;
125 shares issued and outstanding at June 30, 2006 and
December 31, 2005
    
    
    125
    
    
    
    125Common stock, $.01 par value, 125,000,000 shares authorized;
25,613,901 and 25,450,726 shares issued and outstanding at
June 30, 2006 and December 31, 2005, respectively
    
    
    256
    
    
    
    255Additional paid-in-capital
    
    
    219,123
    
    
    
    218,366Accumulated other comprehensive income
    
    
    3,748
    
    
    
    907Distributions in excess of earnings
    
    
    (17,282
    )
    
    
    (19,702
    )Total stockholders equity
    
    
    205,970
    
    
    
    199,951Total liabilities and stockholders equity
    
    $
    977,228
    
    
    $
    893,003
 The accompanying notes are an integral part of these financial statements.
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Origen Financial, Inc.
 
 Consolidated Statements of Earnings (Unaudited)
 (In thousands, except share data)
 For the periods ended June 30, 2006 and 2005
 Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2006
    
    
    2005
    
    
    2006
    
    
    2005Interest IncomeTotal interest income
    
    $
    18,057
    
    
    $
    14,622
    
    
    $
    35,265
    
    
    $
    27,788Total interest expense
    
    
    10,282
    
    
    
    6,681
    
    
    
    19,877
    
    
    
    12,091Net interest income before loan losses
    
    
    7,775
    
    
    
    7,941
    
    
    
    15,388
    
    
    
    15,697Provision for credit losses
    
    
    1,201
    
    
    
    1,645
    
    
    
    3,326
    
    
    
    3,675Net interest income after loan losses
    
    
    6,574
    
    
    
    6,296
    
    
    
    12,062
    
    
    
    12,022Non-interest income
    
    
    4,209
    
    
    
    3,396
    
    
    
    8,388
    
    
    
    6,676Non-interest ExpensesPersonnel
    
    
    6,300
    
    
    
    5,697
    
    
    
    12,267
    
    
    
    11,178Loan origination and servicing
    
    
    336
    
    
    
    380
    
    
    
    712
    
    
    
    794State business taxes
    
    
    77
    
    
    
    77
    
    
    
    175
    
    
    
    190Other operating
    
    
    2,066
    
    
    
    2,025
    
    
    
    4,158
    
    
    
    4,016Total non-interest expense
    
    
    8,779
    
    
    
    8,179
    
    
    
    17,312
    
    
    
    16,178Net income before cumulative effect of
change in accounting principle
    
    $
    2,004
    
    
    $
    1,513
    
    
    $
    3,138
    
    
    $
    2,520Cumulative effect of change in accounting
principle
    
    
    
    
    
    
    
    
    
    
    46
    
    
    
    NET INCOME
    
    $
    2,004
    
    
    $
    1,513
    
    
    $
    3,184
    
    
    $
    2,520Weighted average common shares outstanding
    
    
    25,110,575
    
    
    
    24,818,544
    
    
    
    25,046,090
    
    
    
    24,776,139Weighted average common shares
outstanding, diluted
    
    
    25,149,949
    
    
    
    24,911,198
    
    
    
    25,137,379
    
    
    
    24,899,662Earnings per common share before
cumulative effect of change in accounting
principle:Basic
    
    $
    0.08
    
    
    $
    0.06
    
    
    $
    0.12
    
    
    $
    0.10Diluted
    
    $
    0.08
    
    
    $
    0.06
    
    
    $
    0.12
    
    
    $
    0.10Earnings per common share:Basic
    
    $
    0.08
    
    
    $
    0.06
    
    
    $
    0.13
    
    
    $
    0.10Diluted
    
    $
    0.08
    
    
    $
    0.06
    
    
    $
    0.13
    
    
    $
    0.10
 The accompanying notes are an integral part of these financial statements.
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Origen Financial, Inc.
 
 Consolidated Statements of Comprehensive Income (Loss) (Unaudited)
 (In thousands)
 For the periods ended June 30,
 Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2006
    
    
    2005
    
    
    2006
    
    
    2005Net income
    
    $
    2,004
    
    
    $
    1,513
    
    
    $
    3,184
    
    
    $
    2,520Other comprehensive income (loss):Net unrealized gain (loss) on interest rate swaps
    
    
    1,527
    
    
    
    (2,467
    )
    
    
    2,848
    
    
    
    (1,098
    )Reclassification adjustment for net realized
(gains) losses included in net income
    
    
    (12
    )
    
    
    91
    
    
    
    (7
    )
    
    
    159Total other comprehensive income (loss)
    
    
    1,515
    
    
    
    (2,376
    )
    
    
    2,841
    
    
    
    (939
    )Comprehensive income (loss)
    
    $
    3,519
    
    
    $
    (863
    )
    
    $
    6,025
    
    
    $
    1,581
 The accompanying notes are an integral part of these financial statements.
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Origen Financial, Inc.
 
 Consolidated Statements of Cash Flows (Unaudited)
 (In thousands)
 For the six months ended June 30
 2006
    
    
    2005Cash Flows From Operating ActivitiesNet income
    
    $
    3,184
    
    
    $
    2,520Adjustments to reconcile net income to cash provided by operating
activities:Provision for credit losses
    
    
    3,326
    
    
    
    3,675Investment impairment
    
    
    114
    
    
    
    Depreciation and amortization
    
    
    3,051
    
    
    
    3,932Compensation expense recognized under share-based compensation plans
    
    
    1,092
    
    
    
    1,292Cumulative effect of change in accounting principle
    
    
    (46
    )
    
    
    Increase in other assets
    
    
    (1,795
    )
    
    
    (1,081
    )Decrease in accounts payable and other liabilities
    
    
    (983
    )
    
    
    (466
    )Net cash provided by operating activities
    
    
    7,943
    
    
    
    9,872Cash Flows From Investing ActivitiesIncrease in restricted cash
    
    
    (459
    )
    
    
    (1,676
    )Purchase of investment securities
    
    
    
    
    
    
    (4,240
    )Origination and purchase of loans
    
    
    (139,915
    )
    
    
    (158,989
    )Principal collections on loans
    
    
    42,341
    
    
    
    35,109Proceeds from sale of repossessed houses
    
    
    5,720
    
    
    
    5,638Capital expenditures
    
    
    (342
    )
    
    
    (1,301
    )Net cash used in investing activities
    
    
    (92,655
    )
    
    
    (125,459
    )Cash Flows From Financing ActivitiesDividends paid
    
    
    (764
    )
    
    
    (2,545
    )Repurchase
and retirement of common stock
    
    
    (288
    )
    
    
    (449
    )Proceeds from securitization financing
    
    
    
    
    
    
    164,901Repayment of securitization financing
    
    
    (44,249
    )
    
    
    (30,634
    )Proceeds from advances under repurchase agreements
    
    
    
    
    
    
    2,280Repayment of advances under repurchase agreements
    
    
    
    
    
    
    (360
    )Proceeds from warehouse financing
    
    
    129,284
    
    
    
    137,093Repayment of warehouse financing
    
    
    (4,506
    )
    
    
    (162,338
    )Change in servicing advances, net
    
    
    (1,431
    )
    
    
    1,774Net cash provided by financing activities
    
    
    78,046
    
    
    
    109,722NET DECREASE IN CASH AND CASH EQUIVALENTS
    
    
    (6,666
    )
    
    
    (5,865
    )Cash and cash equivalents, beginning of period
    
    
    8,307
    
    
    
    9,293Cash and cash equivalents, end of period
    
    $
    1,641
    
    
    $
    3,428Supplemental disclosures of cash flow information:Interest paid
    
    $
    19,394
    
    
    $
    11,206Non cash financing activities:Non-vested common stock issued as unearned compensation
    
    $
    1,322
    
    
    $
    2,156Loans transferred to repossessed assets and held for sale
    
    $
    9,589
    
    
    $
    10,219
 The accompanying notes are an integral part of these financial statements.
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Origen Financial, Inc.
 
 Notes to Consolidated Financial Statements (Unaudited)
 Note 1  Basis of Presentation
    Note 2  Recent Accounting Pronouncements
  
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Origen Financial, Inc.
Notes to Consolidated Financial Statements (Unaudited)
 Note 2  Recent Accounting Pronouncements (Continued)
         8




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Origen Financial, Inc.
Notes to Consolidated Financial Statements (Unaudited)
 Note 3  Per Share Data
  Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2006
    
    
    2005
    
    
    2006
    
    
    2005Numerator:Net income
    
    $
    2,004
    
    
    $
    1,513
    
    
    $
    3,184
    
    
    $
    2,520Preferred stock dividends
    
    
    (4
    )
    
    
    (4
    )
    
    
    (8
    )
    
    
    (8
    )Income available to common shareholders
    
    $
    2,000
    
    
    $
    1,509
    
    
    $
    3,176
    
    
    $
    2,512Denominator:Weighted average common shares for
basic EPS
    
    
    25,111
    
    
    
    24,818
    
    
    
    25,046
    
    
    
    24,776Effect of dilutive securities:Weighted average non-vested stock
awards
    
    
    39
    
    
    
    93
    
    
    
    91
    
    
    
    124Weighted average common shares for
diluted EPS
    
    
    25,150
    
    
    
    24,911
    
    
    
    25,137
    
    
    
    24,900Basic EPS
    
    $
    0.08
    
    
    $
    0.06
    
    
    $
    0.13
    
    
    $
    0.10Diluted EPS
    
    $
    0.08
    
    
    $
    0.06
    
    
    $
    0.13
    
    
    $
    0.10
 Note 4 Investments
  Investments Accounted for Under the Provisions of SFAS No. 115
  9




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Origen Financial, Inc.
Notes to Consolidated Financial Statements (Unaudited)
 Note 4 Investments (Continued)
 Investments Accounted for Under the Provisions of SOP 03-3
  Note 5  Loans Receivable
  June 30, 2006
    
    
    December 31, 2005Manufactured housing loans  securitized
    
    $
    650,896
    
    
    $
    695,701Manufactured housing loans  unsecuritized
    
    
    215,275
    
    
    
    85,949Accrued interest receivable
    
    
    4,328
    
    
    
    4,078Deferred fees
    
    
    (773
    )
    
    
    (2,100
    )Discount on purchased loans
    
    
    (3,592
    )
    
    
    (4,773
    )Allowance for purchased loans
    
    
    (428
    )
    
    
    (428
    )Allowance for loan loss
    
    
    (8,779
    )
    
    
    (10,017
    )$
    856,927
    
    
    $
    768,410
   No. of
    
    Principal
    
    % ofDays delinquent
    
    Loans
    
    Balance
    
    Portfolio31-60
    
    
    110
    
    
    $
    4,159
    
    
    
    3.0
    %61-90
    
    
    54
    
    
    
    2,256
    
    
    
    1.6
    %Greater than 90
    
    
    107
    
    
    
    4,549
    
    
    
    3.3
    %
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Origen Financial, Inc.
Notes to Consolidated Financial Statements (Unaudited)
 Note 6  Allowance for Credit Losses
  Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2006
    
    
    2005
    
    
    2006
    
    
    2005Balance at beginning of period
    
    $
    9,670
    
    
    $
    5,294
    
    
    $
    10,017
    
    
    $
    5,315Provision for loan losses
    
    
    1,201
    
    
    
    1,645
    
    
    
    3,326
    
    
    
    3,675Transfers from recourse liability
    
    
    
    
    
    
    925
    
    
    
    
    
    
    
    1,913Gross charge-offs
    
    
    (4,167
    )
    
    
    (4,273
    )
    
    
    (8,623
    )
    
    
    (10,207
    )Recoveries
    
    
    2,075
    
    
    
    2,138
    
    
    
    4,059
    
    
    
    5,033Balance at end of period
    
    $
    8,779
    
    
    $
    5,729
    
    
    $
    8,779
    
    
    $
    5,729
 Note 7 Debt
  June 30,
    
    
    December 31,2006
    
    
    2005Warehouse financing
    
    $
    190,189
    
    
    $
    65,411Securitization financing
    
    
    534,346
    
    
    
    578,503Repurchase agreements
    
    
    23,582
    
    
    
    23,582Notes payable  servicing advances
    
    
    781
    
    
    
    2,212$
    748,898
    
    
    $
    669,708
 Warehouse Financing  Citigroup
 Securitization Financing  2004-A Securitization
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Origen Financial, Inc.
Notes to Consolidated Financial Statements (Unaudited)
 Note 7 Debt (Continued)
 Securitization Financing  2004-B Securitization
 Securitization Financing  2005-A Securitization
 Securitization Financing  2005-B Securitization
 Repurchase Agreements Citigroup
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Origen Financial, Inc.
Notes to Consolidated Financial Statements (Unaudited)
 Note 7  Debt (Continued)
 Note Payable  Servicing Advances JPMorgan Chase Bank, N.A. 
  June 30, 2006
    
    December 31, 2005Average
    
    Average
    
    Average
    
    AverageBalance
    
    Rate
    
    Balance
    
    RateWarehouse financing  Citigroup
    
    $
    121,581
    
    
    
    6.7
    %
    
    $
    139,539
    
    
    
    5.2
    %Securitization financing  2004-A securitization
    
    
    132,932
    
    
    
    5.2
    %
    
    
    154,295
    
    
    
    4.9
    %Securitization financing  2004-B securitization
    
    
    131,511
    
    
    
    5.4
    %
    
    
    149,499
    
    
    
    5.1
    %Securitization financing  2005-A securitization
    
    
    145,501
    
    
    
    5.2
    %
    
    
    101,441
    
    
    
    5.1
    %Securitization financing  2005-B securitization
    
    
    150,289
    
    
    
    5.7
    %
    
    
    7,228
    
    
    
    5.5
    %Repurchase agreements  Citigroup
    
    
    23,582
    
    
    
    5.6
    %
    
    
    22,793
    
    
    
    4.2
    %Note payable  servicing advances  JPMorgan
Chase Bank, N.A.
    
    
    498
    
    
    
    9.5
    %
    
    
    710
    
    
    
    7.5
    %
  Note 8  Share-Based Compensation Plan
   13




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Origen Financial, Inc.
Notes to Consolidated Financial Statements (Unaudited)
 Note 8  Share-Based Compensation Plan (Continued)
  Stock Options
   WeightedWeighted
    
    
    AverageAverage
    
    
    RemainingNumber of
    
    
    Exercise
    
    
    ContractualOptions
    
    
    Price
    
    
    TermOptions outstanding at January 1, 2006
    
    
    255,500
    
    
    $
    10.00
    
    
    
    7.9Granted
    
    
    
    
    
    
    
    
    
    
    Exercised
    
    
    
    
    
    
    
    
    
    
    Forfeited
    
    
    (7,000
    )
    
    $
    10.00
    
    
    
    7.8Options outstanding at June 30, 2006
    
    
    248,500
    
    
    $
    10.00
    
    
    
    7.4Options exercisable at June 30, 2006
    
    
    248,500
    
    
    $
    10.00
    
    
    
    7.4
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Origen Financial, Inc.
Notes to Consolidated Financial Statements (Unaudited)
 Note 8  Share-Based Compensation Plan (Continued)
 Three Months
    
    
    Six MonthsEnded
    
    
    EndedJune 30,
    
    
    June 30,2005
    
    
    2005Net income available to common shareholders
    
    $
    1,509
    
    
    $
    2,512Stock option compensation cost
    
    $
    (3
    )
    
    $
    (6
    )Pro forma net income available to common
shareholders
    
    $
    1,506
    
    
    $
    2,506Basic income per share as reported
    
    $
    0.06
    
    
    $
    0.10Pro forma basic income per share
    
    $
    0.06
    
    
    $
    0.10Diluted income per share as reported
    
    $
    0.06
    
    
    $
    0.10Pro forma diluted income per share
    
    $
    0.06
    
    
    $
    0.10
 Non-Vested Stock Awards
      WeightedNumber of
    
    
    AverageNon-Vested
    
    
    Grant DateStock Awards
    
    
    Fair ValueNon-vested at January 1, 2006
    
    
    469,837
    
    
    $
    8.02Granted
    
    
    215,000
    
    
    
    6.15Vested
    
    
    (269,493
    )
    
    
    8.63Forfeited
    
    
    (5,001
    )
    
    
    7.58Non-vested at June 30, 2006
    
    
    410,343
    
    
    $
    6.65
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Origen Financial, Inc.
Notes to Consolidated Financial Statements (Unaudited)
 Note 9  Derivative Instruments and Hedging Activity
       Note 10  Stockholders Equity
  16




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Origen Financial, Inc.
Notes to Consolidated Financial Statements (Unaudited)
 Note 11  Subsequent Events
    17




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Item 2.
    
    Managements Discussion and Analysis of Financial Condition
and Results of Operations
  
    
    the performance of our manufactured housing loans;
    
    our ability to borrow at favorable rates and terms;
    
    the supply of manufactured housing loans;
    
    interest rate levels and changes in the yield curve (which is the curve formed by the
differing Treasury rates paid on one, two, three, five, ten and 30 year term debt);
    
    our ability to use hedging strategies to insulate our exposure to changing interest
rates;
    
    changes in, and the costs associated with complying with, federal, state and local
regulations, including consumer finance and housing regulations;
    
    applicable laws, including federal income tax laws;
    
    general economic conditions in the markets in which we operate;
   18




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Item 2.
    
    Managements Discussion and Analysis of Financial Condition
and Results of Operations
 Overview
  Recent Developments
  Critical Accounting Policies
    19




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##### Table of Contents



Item 2.
    
    Managements Discussion and Analysis of Financial Condition
and Results of Operations
 Results of Operations
 Comparison of the three months ended June 30, 2006 and 2005.
 Net Income
  Interest Income
    2006
    
    
    2005Average
    
    
    
    
    
    
    Yield/
    
    
    Average
    
    
    
    
    
    
    Yield/Balance
    
    
    Interest
    
    
    Rate
    
    
    Balance
    
    
    Interest
    
    
    RateInterest earning assets:Manufactured housing loans1
    
    $
    824,897
    
    
    $
    16,927
    
    
    
    8.21
    %
    
    $
    650,141
    
    
    $
    13,546
    
    
    
    8.33
    %Investment securities
    
    
    41,350
    
    
    
    926
    
    
    
    8.96
    %
    
    
    41,031
    
    
    
    961
    
    
    
    9.37
    %Other
    
    
    16,839
    
    
    
    204
    
    
    
    4.85
    %
    
    
    18,357
    
    
    
    115
    
    
    
    2.51
    %Total
    
    $
    883,086
    
    
    $
    18,057
    
    
    
    8.18
    %
    
    $
    709,529
    
    
    $
    14,622
    
    
    
    8.24
    %Interest bearing liabilities2:Loan funding facilities
    
    $
    702,681
    
    
    $
    9,924
    
    
    
    5.65
    %
    
    $
    527,213
    
    
    $
    6,455
    
    
    
    4.90
    %Repurchase agreements
    
    
    23,582
    
    
    
    348
    
    
    
    5.90
    %
    
    
    22,091
    
    
    
    212
    
    
    
    3.84
    %Notes payable  servicing advance
    
    
    326
    
    
    
    10
    
    
    
    12.27
    %
    
    
    742
    
    
    
    14
    
    
    
    7.55
    %Total
    
    $
    726,589
    
    
    $
    10,282
    
    
    
    5.66
    %
    
    $
    550,046
    
    
    $
    6,681
    
    
    
    4.86
    %Net interest income and interest rate spread
    
    
    
    
    
    $
    7,775
    
    
    
    2.52
    %
    
    
    
    
    
    $
    7,941
    
    
    
    3.38
    %Net yield on average interest earning assets3
    
    
    
    
    
    
    
    
    
    
    3.52
    %
    
    
    
    
    
    
    
    
    
    
    4.48
    %
 
 1
    
    Net of loan servicing fees.2
    
    Includes facility fees.3
    
    Amount is calculated as annualized net
interest income divided by total average interest earning assets. 20




---



##### Table of Contents



Item 2.
    
    Managements Discussion and Analysis of Financial Condition
and Results of Operations
  Volume
    
    
    Rate
    
    
    TotalInterest earning assets:Manufactured housing loans
    
    $
    14,565
    
    
    $
    (11,184
    )
    
    $
    3,381Investment securities
    
    
    30
    
    
    
    (65
    )
    
    
    (35
    )Other
    
    
    (38
    )
    
    
    127
    
    
    
    89Total interest income
    
    $
    14,557
    
    
    $
    (11,122
    )
    
    $
    3,435Interest bearing liabilities:Loan funding facilities
    
    $
    8,593
    
    
    $
    (5,124
    )
    
    $
    3,469Repurchase agreements
    
    
    57
    
    
    
    79
    
    
    
    136Notes payable  servicing advances
    
    
    (31
    )
    
    
    27
    
    
    
    (4
    )Total interest expense
    
    $
    8,619
    
    
    $
    (5,018
    )
    
    $
    3,601Decrease in net interest income
    
    
    
    
    
    
    
    
    
    $
    (166
    )
 Non-interest Income
  Provision for Losses
   Non-interest Expenses
  21




---



##### Table of Contents



Item 2.
    
    Managements Discussion and Analysis of Financial Condition
and Results of Operations
 Comparison of the six months ended June 30, 2006 and 2005.
 Net Income
  Interest Income
    2006
    
    
    2005Average
    
    
    
    
    
    
    Yield/
    
    
    Average
    
    
    
    
    
    
    Yield/Balance
    
    
    Interest
    
    
    Rate
    
    
    Balance
    
    
    Interest
    
    
    RateInterest earning assets:Manufactured housing loans1
    
    $
    803,846
    
    
    $
    33,028
    
    
    
    8.22
    %
    
    $
    616,277
    
    
    $
    25,768
    
    
    
    8.36
    %Investment securities
    
    
    41,356
    
    
    
    1,877
    
    
    
    9.08
    %
    
    
    39,555
    
    
    
    1,830
    
    
    
    9.25
    %Other
    
    
    16,594
    
    
    
    360
    
    
    
    4.34
    %
    
    
    16,538
    
    
    
    190
    
    
    
    2.30
    %Total
    
    $
    861,796
    
    
    $
    35,265
    
    
    
    8.18
    %
    
    $
    672,370
    
    
    $
    27,788
    
    
    
    8.27
    %Interest bearing liabilities2:Loan funding facilities
    
    $
    681,814
    
    
    $
    19,192
    
    
    
    5.63
    %
    
    $
    490,222
    
    
    $
    11,682
    
    
    
    4.77
    %Repurchase agreements
    
    
    23,582
    
    
    
    661
    
    
    
    5.61
    %
    
    
    21,358
    
    
    
    386
    
    
    
    3.61
    %Notes payable  servicing advance
    
    
    498
    
    
    
    24
    
    
    
    9.64
    %
    
    
    573
    
    
    
    23
    
    
    
    8.03
    %Total
    
    $
    705,894
    
    
    $
    19,877
    
    
    
    5.63
    %
    
    $
    512,153
    
    
    $
    12,091
    
    
    
    4.72
    %Net interest income and interest rate spread
    
    
    
    
    
    $
    15,388
    
    
    
    2.55
    %
    
    
    
    
    
    $
    15,697
    
    
    
    3.54
    %Net yield on average interest earning assets3
    
    
    
    
    
    
    
    
    
    
    3.57
    %
    
    
    
    
    
    
    
    
    
    
    4.67
    %
 
 1
    
    Net of loan servicing fees.2
    
    Includes facility fees.3
    
    Amount is calculated as annualized net
interest income divided by total average interest earning assets. 22




---



##### Table of Contents



Item 2.
    
    Managements Discussion and Analysis of Financial Condition
and Results of Operations
  Volume
    
    
    Rate
    
    
    TotalInterest earning assets:Manufactured housing loans
    
    $
    15,685
    
    
    $
    (8,425
    )
    
    $
    7,260Investment securities
    
    
    167
    
    
    
    (120
    )
    
    
    47Other
    
    
    1
    
    
    
    169
    
    
    
    170Total interest income
    
    $
    15,853
    
    
    $
    (8,376
    )
    
    $
    7,477Interest bearing liabilities:Loan funding facilities
    
    $
    9,131
    
    
    $
    (1,621
    )
    
    $
    7,510Repurchase agreements
    
    
    80
    
    
    
    195
    
    
    
    275Notes payable  servicing advances
    
    
    (6
    )
    
    
    7
    
    
    
    1Total interest expense
    
    $
    9,205
    
    
    $
    (1,419
    )
    
    $
    7,786Decrease in net interest income
    
    
    
    
    
    
    
    
    
    $
    (309
    )
 Non-interest Income
  Provision for Losses
   Non-interest Expenses
  23




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##### Table of Contents



Item 2.
    
    Managements Discussion and Analysis of Financial Condition
and Results of Operations
 Receivable Portfolio and Asset Quality
    June 30, 2006
    
    December 31, 2005Principal
balance of loans receivable
    
    $
    866,171
    
    
    $
    781,650Number of loans receivable
    
    
    18,687
    
    
    
    17,277Average loan balance
    
    $
    46
    
    
    $
    45Weighted average loan coupon1
    
    
    9.52
    %
    
    
    9.56
    %Weighted average initial term
    
    20 years
    
    20 years
  June 30, 2006
    

December 31, 2005No. of
    
    Principal
    
    % of
    
    No. of
    
    Principal
    
    % ofDays delinquent
    
    Loans
    
    Balance
    
    Portfolio
    
    Loans
    
    Balance
    
    Portfolio31-60
    
    
    210
    
    
    $
    8,386
    
    
    
    1.0
    %
    
    
    215
    
    
    $
    8,182
    
    
    
    1.0
    %61-90
    
    
    73
    
    
    
    2,504
    
    
    
    0.3
    %
    
    
    68
    
    
    
    2,561
    
    
    
    0.3
    %Greater than 90
    
    
    118
    
    
    
    4,725
    
    
    
    0.5
    %
    
    
    192
    
    
    
    7,480
    
    
    
    1.0
    %
   
 1
    
    The weighted average loan coupon includes an
imbedded servicing fee rate resulting from securitization or sale of the loan
but accounted for as a financing. 24




---



##### Table of Contents



Item 2.
    
    Managements Discussion and Analysis of Financial Condition
and Results of Operations
     Loan
Pool Unpaid Principal Balance (dollars in thousands) 1
 2002 and2001 and prior
    
    subsequentAt December 31, 2005Dollars
    
    $
    56,622
    
    
    $
    732,033Percentage of total
    
    
    7.2
    %
    
    
    92.8
    %At June 30, 2006Dollars
    
    $
    51,059
    
    
    $
    822,656Percentage of total
    
    
    5.8
    %
    
    
    94.2
    %
 Static Pool Performance (dollars in thousands) 1
 2002 and2001 and prior
    
    subsequentSix Months Ended June 30, 2006Dollars defaulted
    
    $
    2,926
    
    
    $
    6,663Net recovery percentage
    
    
    33.9
    %
    
    
    45.7
    %Net losses
    
    $
    2,502
    
    
    $
    3,842
  
 1
    
    Includes owned portfolio, repossessed
inventory and loans sold with recourse 25




---



##### Table of Contents



Item 2.
    
    Managements Discussion and Analysis of Financial Condition
and Results of Operations
  Liquidity and Capital Resources
     26




---



##### Table of Contents



Item 2.
    
    Managements Discussion and Analysis of Financial Condition
and Results of Operations
      27




---



##### Table of Contents



Item 2.
    
    Managements Discussion and Analysis of Financial Condition
and Results of Operations
   28




---



##### Table of Contents



Item 3.
    
    Quantitative and Qualitative Disclosures About Market Risk
    Maturity0 to 3
    
    
    4 to 12
    
    
    1 to 5
    
    
    Over 5months
    
    
    months
    
    
    years
    
    
    years
    
    
    TotalAssetsCash and equivalents
    
    $
    1,641
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    1,641Restricted cash
    
    
    14,094
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    14,094Loans receivable, net
    
    
    29,874
    
    
    
    84,449
    
    
    
    338,233
    
    
    
    404,371
    
    
    
    856,927Investments held to maturity
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    41,543
    
    
    
    41,543Furniture, fixtures and equipment, net
    
    
    270
    
    
    
    845
    
    
    
    2,266
    
    
    
    
    
    
    
    3,381Goodwill
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    32,277
    
    
    
    32,277Other assets
    
    
    11,070
    
    
    
    9,665
    
    
    
    4,051
    
    
    
    2,579
    
    
    
    27,365Total assets
    
    $
    56,949
    
    
    $
    94,959
    
    
    $
    344,550
    
    
    $
    480,770
    
    
    $
    977,228Liabilities and Stockholders EquityWarehouse financing
    
    $
    47,547
    
    
    $
    142,642
    
    
    $
    
    
    
    $
    
    
    
    $
    190,189Securitization financing
    
    
    18,628
    
    
    
    52,659
    
    
    
    210,909
    
    
    
    252,150
    
    
    
    534,346Repurchase agreements
    
    
    23,582
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    23,582Notes payable  servicing advances
    
    
    781
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    781Other liabilities
    
    
    20,655
    
    
    
    262
    
    
    
    137
    
    
    
    1,306
    
    
    
    22,360Total liabilities
    
    
    111,193
    
    
    
    195,563
    
    
    
    211,046
    
    
    
    253,456
    
    
    
    771,258Preferred stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    125
    
    
    
    125Common stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    256
    
    
    
    256Additional paid-in-capital
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    219,123
    
    
    
    219,123Accumulated other comprehensive income
    
    
    9
    
    
    
    (9
    )
    
    
    187
    
    
    
    3,561
    
    
    
    3,748Distributions in excess of earnings
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (17,282
    )
    
    
    (17,282
    )Total stockholders equity
    
    
    9
    
    
    
    (9
    )
    
    
    187
    
    
    
    205,783
    
    
    
    205,970Total liabilities and stockholders equity
    
    $
    111,202
    
    
    $
    195,554
    
    
    $
    211,233
    
    
    $
    459,239
    
    
    $
    977,228Interest sensitivity gap
    
    $
    (54,253
    )
    
    $
    (100,595
    )
    
    $
    133,317
    
    
    $
    21,531Cumulative interest sensitivity gap
    
    $
    (54,253
    )
    
    $
    (154,848
    )
    
    $
    (21,531
    )
    
    
    Cumulative interest sensitivity gap to
total assets
    
    
    (5.55
    )%
    
    
    (15.85
    )%
    
    
    (2.20
    )%
    
    
    
  29




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##### Table of Contents



Item 3. Quantitative and Qualitative Disclosures About Market Risk
   Contractual MaturityThere-2006
    
    
    2007
    
    
    2008
    
    
    2009
    
    
    2010
    
    
    after
    
    
    TotalInterest sensitive assetsLoans receivable
    
    $
    58,881
    
    
    $
    107,558
    
    
    $
    94,935
    
    
    $
    83,736
    
    
    $
    73,829
    
    
    $
    437,988
    
    
    $
    856,927Average interest rate
    
    
    9.52
    %
    
    
    9.52
    %
    
    
    9.52
    %
    
    
    9.52
    %
    
    
    9.52
    %
    
    
    9.52
    %
    
    
    9.52
    %Interest bearing deposits
    
    
    14,574
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    14,574Average interest rate
    
    
    4.34
    %
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4.34
    %Investments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    41,543
    
    
    
    41,543Average interest rate
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    9.08
    %
    
    
    9.08
    %Interest
rate swaps
receivable
    
    
    2,848
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,848Average interest rate
    
    
    5.07
    %
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5.07
    %Total interest sensitive
assets
    
    $
    76,303
    
    
    $
    107,558
    
    
    $
    94,935
    
    
    $
    83,736
    
    
    $
    73,829
    
    
    $
    479,531
    
    
    $
    915,892Interest sensitive
liabilitiesWarehouse financing
    
    $
    95,095
    
    
    $
    95,094
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    190,189Average interest rate
    
    
    6.73
    %
    
    
    6.73
    %
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6.73
    %Securitization financing
    
    
    36,716
    
    
    
    67,069
    
    
    
    59,198
    
    
    
    52,215
    
    
    
    46,037
    
    
    
    273,111
    
    
    
    534,346Average interest rate
    
    
    5.39
    %
    
    
    5.39
    %
    
    
    5.39
    %
    
    
    5.39
    %
    
    
    5.39
    %
    
    
    5.39
    %
    
    
    5.39
    %Repurchase agreements
    
    
    23,582
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    23,582Average interest rate
    
    
    5.61
    %
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5.61
    %Note payable  servicing
advance
    
    
    781
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    781Average interest rate
    
    
    9.51
    %
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    9.51
    %Total interest sensitive
liabilities
    
    $
    156,174
    
    
    $
    162,163
    
    
    $
    59,198
    
    
    $
    52,215
    
    
    $
    46,037
    
    
    $
    273,111
    
    
    $
    748,898
 30




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##### Table of Contents



Item 4.
    
    Controls and Procedures
   
 PART II        OTHER INFORMATION
 ITEM 4. Submission of Matters to a Vote of Security Holders
  Nominee
    
    For
    
    WithheldPaul A. Halpern
    
    
    22,125,821
    
    
    
    815,948Ronald A. Klein
    
    
    22,777,774
    
    
    
    163,995Richard H. Rogel
    
    
    22,316,911
    
    
    
    624,858Gary A. Shiffman
    
    
    22,684,415
    
    
    
    257,354Michael J. Wechsler
    
    
    22,316,911
    
    
    
    624,858James A. Williams
    
    
    22,224,507
    
    
    
    717,262
 
 ITEM 6. Exhibits and Reports on Form 8-K
  Exhibit No.
    
    Description
    
    Method of Filing31.1
    
    Certification of Chief Executive
Officer Required by Rule 13a-14(a) of
the Securities Exchange Act of 1934, as
amended.
    
    
    (1
    )31.2
    
    Certification of Chief Financial
Officer Required by Rule 13a-14(a) of
the Securities Exchange Act of 1934, as
amended.
    
    
    (1
    )32.1
    
    Certification of Chief Executive
Officer and Chief Financial Officer
Required by Rule 13a-14(b) of the
Securities Exchange Act of 1934, as
amended.
    
    
    (1
    )
 
 (1)
    
    Filed herewith. 31




---



##### Table of Contents



(i)
    
    Form 8-K, filed May 11, 2006, furnished for the purpose of reporting,
under Item 2.02 (Results of Operations and Financial Condition), our preliminary
unaudited financial results for the quarter ended March 31, 2006.(ii)
    
    Form 8-K, filed June 21, 2006, furnished for the purpose of
reporting, under Items 1.01 (Entry into a Material Definitive Agreement) and 9.01
(Financial Statements and Exhibits), the approval and adoption of the Origen
Financial, Inc. 2006 Retention Plan by the Board of Directors and the Compensation
Committee of Origen Financial, Inc.
 32




---



##### Table of Contents



SIGNATURES
   ORIGEN FINANCIAL, INC. (Registrant)BY:
    
    /s/ W. Anderson Geater, Jr.W. Anderson Geater, Jr., ChiefFinancial Officer and Secretary(Duly authorized officer and principalfinancial officer)
 33




---



##### Table of Contents



ORIGEN FINANCIAL, INC.
 
 EXHIBIT INDEX
 Exhibit No.
    
    Description
    
    Method of Filing31.1
    
    Certification of Chief Executive
Officer Required by Rule 13a-14(a) of
the Securities Exchange Act of 1934, as
amended.
    
    
    (1
    )31.2
    
    Certification of Chief Financial
Officer Required by Rule 13a-14(a) of
the Securities Exchange Act of 1934, as
amended.
    
    
    (1
    )32.1
    
    Certification of Chief Executive
Officer and Chief Financial Officer
Required by Rule 13a-14(b) of the
Securities Exchange Act of 1934, as
amended.
    
    
    (1
    )
 
 (1)
    
    Filed herewith.