##### 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 September 30, 2005.
 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
    
    20-0145649(State of Incorporation)
    
    (I.R.S. Employer Identification No.)
 27777 Franklin Rd.Suite 1700Southfield, MI
    
    48034(Address of Principal Executive Offices)
    
    (Zip Code)
  þ o
 o þ
 o þ




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Origen Financial, Inc.
 Index
 PagePart I Financial InformationItem 1. Financial Statements (Unaudited)Consolidated Balance Sheets  as of September 30, 2005 and December 31, 2004
    
    
    3Consolidated Statements of Earnings for the periods ended September 30, 2005 and 2004
    
    
    4Consolidated Statements of Comprehensive Income for the periods ended September 30, 2005 and 2004
    
    
    5Consolidated Statements of Cash Flows for the nine months ended September 30, 2005 and 2004
    
    
    6Notes to Consolidated Financial Statements
    
    
    7Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    22Item 3. Quantitative and Qualitative Disclosures about Market Risk
    
    
    42Item 4. Controls and Procedures
    
    
    46Part II Other InformationItem 6. Exhibits and Reports on Form 8-K
    
    
    47Signatures
    
    
    48Section 302 Certification of Chief Executive OfficerSection 302 Certification of Chief Financial OfficerSection 906 Certification of Chief Executive and Chief Financial Officers




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##### Table of Contents



Part I. Financial Information
 
 Item 1. Financial Statements
 Origen Financial, Inc.
 
 Consolidated Balance Sheet
 (In thousands, except share data)
 September 30, 2005 and December 31, 2004
 September 30,
    
    
    December 31,2005
    
    
    2004(Unaudited)ASSETSAssetsCash and cash equivalents
    
    $
    2,341
    
    
    $
    9,293Restricted cash
    
    
    13,532
    
    
    
    9,222Loans receivable, net of allowance for losses of
$9,910 and $5,315, respectively
    
    
    719,605
    
    
    
    563,268Investments
    
    
    41,642
    
    
    
    37,622Furniture, fixtures and equipment, net
    
    
    3,350
    
    
    
    2,336Goodwill
    
    
    32,277
    
    
    
    32,277Other assets
    
    
    26,729
    
    
    
    28,529Total assets
    
    $
    839,476
    
    
    $
    682,547LIABILITIES AND STOCKHOLDERS EQUITYLiabilitiesWarehouse financing
    
    $
    146,914
    
    
    $
    107,373Securitization financing
    
    
    443,091
    
    
    
    328,388Repurchase agreements
    
    
    25,036
    
    
    
    20,153Notes payable  servicing advances
    
    
    1,539
    
    
    
    Recourse liability
    
    
    294
    
    
    
    6,603Other liabilities
    
    
    23,987
    
    
    
    16,564Total liabilities
    
    
    640,861
    
    
    
    479,081Stockholders EquityPreferred stock, $.01 par value, 10,000,000 shares
authorized; 125 shares issued and outstanding
at September 30, 2005 and December 31, 2004, respectively
    
    
    125
    
    
    
    125Common stock, $.01 stated value, 125,000,000 shares
authorized; 25,454,060 and 25,215,400 shares issued and
outstanding at September 30, 2005 and December 31, 2004,
respectively
    
    
    255
    
    
    
    252Additional paid-in-capital
    
    
    220,826
    
    
    
    219,121Accumulated other comprehensive loss
    
    
    (478
    )
    
    
    (1,807
    )Unearned stock compensation
    
    
    (3,044
    )
    
    
    (2,790
    )Distributions in excess of earnings
    
    
    (19,069
    )
    
    
    (11,435
    )Total stockholders equity
    
    
    198,615
    
    
    
    203,466Total liabilities and stockholders equity
    
    $
    839,476
    
    
    $
    682,547
 The accompanying notes are an integral part of these financial statements.
 3




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Origen Financial, Inc.
 
 Consolidated Statement of Earnings (Unaudited)
 (In thousands, except share data)
 For the periods ended September 30, 2005 and 2004
 Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2005
    
    
    2004
    
    
    2005
    
    
    2004Interest IncomeTotal interest income
    
    $
    15,408
    
    
    $
    11,212
    
    
    $
    43,196
    
    
    $
    30,016Total interest expense
    
    
    7,714
    
    
    
    3,723
    
    
    
    19,805
    
    
    
    10,037Net interest income before loan losses
    
    
    7,694
    
    
    
    7,489
    
    
    
    23,391
    
    
    
    19,979Provision for credit losses
    
    
    6,697
    
    
    
    1,500
    
    
    
    10,372
    
    
    
    4,922Impairment of purchased loan pool
    
    
    428
    
    
    
    
    
    
    
    428
    
    
    
    Net interest income after loan losses
and impairment
    
    
    569
    
    
    
    5,989
    
    
    
    12,591
    
    
    
    15,057Non-Interest Income
    
    
    3,874
    
    
    
    2,976
    
    
    
    10,550
    
    
    
    8,870Non-Interest ExpensesPersonnel
    
    
    5,887
    
    
    
    5,206
    
    
    
    17,065
    
    
    
    14,523Loan origination and servicing
    
    
    371
    
    
    
    345
    
    
    
    1,165
    
    
    
    996Provision for recourse liability
    
    
    
    
    
    
    
    
    
    
    218
    
    
    
    Write-down of residual interest
    
    
    724
    
    
    
    
    
    
    
    724
    
    
    
    Loss on recourse buyout
    
    
    869
    
    
    
    
    
    
    
    869
    
    
    
    State business taxes
    
    
    74
    
    
    
    13
    
    
    
    264
    
    
    
    176Other operating
    
    
    2,600
    
    
    
    1,992
    
    
    
    6,398
    
    
    
    5,166Total non-interest expense
    
    
    10,525
    
    
    
    7,556
    
    
    
    26,703
    
    
    
    20,861NET (LOSS) INCOME
    
    $
    (6,082
    )
    
    $
    1,409
    
    
    $
    (3,562
    )
    
    $
    3,066Weighted average common
shares outstanding, basic
    
    
    24,980,889
    
    
    
    24,726,729
    
    
    
    25,845,216
    
    
    
    20,347,128Weighted average common
shares outstanding, diluted
    
    
    24,980,889
    
    
    
    25,028,922
    
    
    
    25,845,216
    
    
    
    20,580,491Earnings per common share:Basic
    
    $
    (0.24
    )
    
    $
    0.06
    
    
    $
    (0.14
    )
    
    $
    0.15Diluted
    
    $
    (0.24
    )
    
    $
    0.06
    
    
    $
    (0.14
    )
    
    $
    0.15
 The accompanying notes are an integral part of these financial statements.
 4




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Origen Financial, Inc.
 
 Consolidated
Statement of Other Comprehensive Income (Loss) (Unaudited)
 (In thousands, except share data)
 For the periods ended September 30, 2005 and 2004
 Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2005
    
    
    2004
    
    
    2005
    
    
    2004Net (loss) income
    
    $
    (6,082
    )
    
    $
    1,409
    
    
    $
    (3,562
    )
    
    $
    3,066Other comprehensive income:Net unrealized gain (loss) on interest rate swaps
    
    
    2,154
    
    
    
    (1,875
    )
    
    
    1,056
    
    
    
    (1,855
    )Less reclassification of adjustment
for net realized losses included
in net income
    
    
    114
    
    
    
    
    
    
    
    273
    
    
    
    Comprehensive (loss) income
    
    $
    (3,814
    )
    
    $
    (466
    )
    
    $
    (2,233
    )
    
    $
    1,211
 The accompanying notes are an integral part of these financial statements.
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Origen Financial, Inc.
 
 Consolidated Statement of Cash Flows (Unaudited)
 (In thousands, except share data)
 For the nine months ended September 30
 2005
    
    
    2004Cash Flows From Operating ActivitiesNet (loss) income
    
    $
    (3,562
    )
    
    $
    3,066Adjustments to reconcile net income to
cash used in operating activities:Provision for credit losses and recourse liability
    
    
    10,590
    
    
    
    4,922Impairment of purchased loan pool
    
    
    428
    
    
    
    Impairment of residual interest
    
    
    724
    
    
    
    Depreciation and amortization
    
    
    5,989
    
    
    
    4,172Increase in other assets
    
    
    (1,223
    )
    
    
    (13,327
    )Increase (decrease) in accounts payable and other liabilities
    
    
    36
    
    
    
    (2,495
    )Net cash provided by (used in) operating activities
    
    
    12,982
    
    
    
    (3,662
    )Cash Flows From Investing ActivitiesIncrease in restricted cash
    
    
    (4,310
    )
    
    
    (1,804
    )Purchase of investment securities
    
    
    (4,106
    )
    
    
    (36,697
    )Originations and purchases of loans
    
    
    (216,613
    )
    
    
    (202,472
    )Principal collections on loans
    
    
    41,482
    
    
    
    46,375Proceeds from sale of repossessed homes
    
    
    8,697
    
    
    
    7,780Capital expenditures
    
    
    (1,650
    )
    
    
    (286
    )Net cash used in investing activities
    
    
    (176,500
    )
    
    
    (187,104
    )Cash Flows From Financing ActivitiesNet proceeds from issuance of preferred stock
    
    
    
    
    
    
    95Net proceeds from issuance of common stock
    
    
    
    
    
    
    73,301Dividends paid
    
    
    (4,072
    )
    
    
    (2,170
    )Proceeds from warehouse and securitization financing
    
    
    378,365
    
    
    
    687,445Repayment of warehouse and securitization financing
    
    
    (219,266
    )
    
    
    (533,458
    )Net change in notes payable  servicing advances
    
    
    1,539
    
    
    
    (4,037
    )Net cash provided by financing activities
    
    
    156,566
    
    
    
    221,176NET (DECREASE) INCREASE IN CASH AND CASH
EQUIVALENTS
    
    
    (6,952
    )
    
    
    30,410Cash and cash equivalents, beginning of period
    
    
    9,293
    
    
    
    6,926Cash and cash equivalents, end of period
    
    $
    2,341
    
    
    $
    37,336Supplemental disclosures of cash flow information:Interest paid
    
    $
    19,011
    
    
    $
    9,779Non cash investing and financing activities:Restricted common stock issued as unearned compensation
    
    $
    2,156
    
    
    $
    3,918
 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
    7




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Origen Financial, Inc.
 Notes to Consolidated Financial Statements (Unaudited)
 Note 2  Recent Accounting Pronouncements
  
   8




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Origen Financial, Inc.
 Notes to Consolidated Financial Statements (Unaudited)
 Note 2  Recent Accounting Pronouncements (Continued)
   9




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Origen Financial, Inc.
 Notes to Consolidated Financial Statements (Unaudited)
 Note 3  Per Share Data
  Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2005
    
    
    2004
    
    
    2005
    
    
    2004Numerator:Net (loss) income
    
    $
    (6,082
    )
    
    $
    1,409
    
    
    $
    (3,562
    )
    
    $
    3,066Preferred stock dividends
    
    
    (4
    )
    
    
    (4
    )
    
    
    (12
    )
    
    
    (12
    )Net (loss) income available to
common shareholders
    
    $
    (6,086
    )
    
    $
    1,405
    
    
    $
    (3,574
    )
    
    $
    3,054Denominator:Weighted average common shares
for basic EPS
    
    
    24,981
    
    
    
    24,727
    
    
    
    24,845
    
    
    
    20,347Effect of dilutive securities:Restricted stock awards
    
    
    
    
    
    
    302
    
    
    
    
    
    
    
    233Weighted average common shares
for diluted EPS
    
    
    24,981
    
    
    
    25,029
    
    
    
    24,845
    
    
    
    20,580Basic EPS
    
    $
    (0.24
    )
    
    $
    0.06
    
    
    $
    (0.14
    )
    
    $
    0.15Diluted EPS
    
    $
    (0.24
    )
    
    $
    0.06
    
    
    $
    (0.14
    )
    
    $
    0.15
  10




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Origen Financial, Inc.
 Notes to Consolidated Financial Statements (Unaudited)
 Note 4 Stock Options
   Three Months
    
    
    Nine MonthsEnded
    
    
    EndedSeptember 30, 2005Net income (loss) available to
common shareholders
    
    $
    (6,086
    )
    
    $
    (3,574
    )Stock option compensation cost
    
    
    (3
    )
    
    
    (10
    )Pro forma net (loss) income available to
common shareholders
    
    $
    (6,089
    )
    
    $
    (3,584
    )Basic (loss) income per share as reported
    
    $
    (0.24
    )
    
    $
    (0.14
    )Stock option compensation cost
    
    
    
    
    
    
    Pro forma basic (loss) income per share
    
    $
    (0.24
    )
    
    $
    (0.14
    )Diluted (loss) income per share as reported
    
    $
    (0.24
    )
    
    $
    (0.14
    )Stock option compensation cost
    
    
    
    
    
    
    Pro forma diluted (loss) income per share
    
    $
    (0.24
    )
    
    $
    (0.14
    )
  11




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Origen Financial, Inc.
 Notes to Consolidated Financial Statements (Unaudited)
 Note 5 Investments
  12




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Origen Financial, Inc.
 Notes to Consolidated Financial Statements (Unaudited)
 Note 6  Allowance for Credit Losses and Recourse Liability
  Three Months
    
    
    Nine MonthsEnded September 30,
    
    
    Ended September 30,2005
    
    
    2004
    
    
    2005
    
    
    2004Balance at beginning of period
    
    $
    5,729
    
    
    $
    4,547
    
    
    $
    5,315
    
    
    $
    3,614Provision for loan losses1
    
    
    6,697
    
    
    
    1,500
    
    
    
    10,372
    
    
    
    4,922Transfers from recourse liability
    
    
    123
    
    
    
    928
    
    
    
    2,036
    
    
    
    3,990Gross chargeoffs
    
    
    (5,512
    )
    
    
    (4,531
    )
    
    
    (15,719
    )
    
    
    (14,253
    )Recoveries
    
    
    2,873
    
    
    
    2,249
    
    
    
    7,906
    
    
    
    6,420Balance at end of period
    
    $
    9,910
    
    
    $
    4,693
    
    
    $
    9,910
    
    
    $
    4,693
  Three Months
    
    
    Nine MonthsEnded September 30,
    
    
    Ended September 30,2005
    
    
    2004
    
    
    2005
    
    
    2004Balance at beginning of period
    
    $
    4,908
    
    
    $
    5,678
    
    
    $
    6,603
    
    
    $
    8,740Termination of Vanderbilt recourse
    
    
    (4,491
    )
    
    
    
    
    
    
    (4,491
    )
    
    
    Provision for recourse liability
    
    
    
    
    
    
    
    
    
    
    218
    
    
    
    Transfers to allowance for credit losses
    
    
    (123
    )
    
    
    (928
    )
    
    
    (2,036
    )
    
    
    (3,990
    )Balance at end of period
    
    $
    294
    
    
    $
    4,750
    
    
    $
    294
    
    
    $
    4,750
  
 1
    
    The provision for loan losses includes approximately $3.5 million related to the effects of Hurricane Katrina and
Hurricane Rita. 13




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Origen Financial, Inc.
 Notes to Consolidated Financial Statements (Unaudited)
 Note 7  Loans Receivable and Securitizations
  September 30,
    
    
    December 31,2005
    
    
    2004Manufactured
housing loans - securitized
    
    $
    540,915
    
    
    $
    401,995Manufactured housing loans  unsecuritized
    
    
    192,677
    
    
    
    170,978Accrued interest receivable
    
    
    3,781
    
    
    
    3,285Deferred fees
    
    
    (2,319
    )
    
    
    (3,100
    )Discount on purchased loans
    
    
    (5,111
    )
    
    
    (4,575
    )Impairment of purchased loan pool
    
    
    (428
    )
    
    
    Allowance for loan loss
    
    
    (9,910
    )
    
    
    (5,315
    )$
    719,605
    
    
    $
    563,268
   No. of
    
    
    Principal
    
    
    % ofDays delinquent
    
    Loans
    
    
    Balance
    
    
    Portfolio31-60
    
    
    139
    
    
    $
    5,545
    
    
    
    3.5
    %61-90
    
    
    54
    
    
    $
    2,040
    
    
    
    1.3
    %Greater than 90
    
    
    200
    
    
    $
    8,681
    
    
    
    5.6
    %
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Origen Financial, Inc.
 Notes to Consolidated Financial Statements (Unaudited)
 Note 7  Loans Receivable and Securitizations (Continued)
  Note 8 Debt
  September 30,
    
    
    December 31,2005
    
    
    2004Warehouse financing
    
    $
    146,914
    
    
    $
    107,373Securitization financing
    
    
    443,091
    
    
    
    328,388Notes payable  servicing advances
    
    
    1,539
    
    
    
    Repurchase agreements
    
    
    25,036
    
    
    
    20,153$
    616,580
    
    
    $
    455,914
 Notes Payable  Citigroup
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Origen Financial, Inc.
 Notes to Consolidated Financial Statements (Unaudited)
 Note 8  Debt (Continued)
 Repurchase Agreements
 Notes Payable  2004-A Securitization 
 Notes Payable  2004-B Securitization 
 16




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Origen Financial, Inc.
 Notes to Consolidated Financial Statements (Unaudited)
 Note 8  Debt (Continued)
 Notes Payable  2005-A Securitization
 Notes Payable  Servicing Advances 
  September 30, 2005
    
    December 31, 2004Average
    
    
    Average
    
    Average
    

    
    AverageBalance
    
    
    Rate
    
    Balance
    
    
    RateNotes payable  Citigroup
    
    $
    123,019
    
    
    
    4.9
    %
    
    $
    139,115
    
    
    
    3.9
    %Notes payable  2004-A securitization
    
    
    158,099
    
    
    
    4.8
    %
    
    
    163,088
    
    
    
    4.4
    %Notes payable  2004-B securitization
    
    
    152,714
    
    
    
    5.0
    %
    
    
    42,299
    
    
    
    4.8
    %Notes payable  2005-A securitization
    
    
    83,683
    
    
    
    5.0
    %
    
    
    
    
    
    
    Repurchase agreement
    
    
    22,337
    
    
    
    3.9
    %
    
    
    17,573
    
    
    
    2.3
    %Note payable  servicing advances
    
    
    623
    
    
    
    7.9
    %
    
    
    553
    
    
    
    7.0
    %
 17




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Origen Financial, Inc.
 Notes to Consolidated Financial Statements (Unaudited)
 Note 9  Equity Incentive Plan
   18




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Origen Financial, Inc.
 Notes to Consolidated Financial Statements (Unaudited)
 Note 10  Derivative Instruments and Hedging Activity
       19




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Origen Financial, Inc.
 Notes to Consolidated Financial Statements (Unaudited)
 Note 11  Stockholders Equity
  Note 12  Related Party Transactions
     20




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Origen Financial, Inc.
 Notes to Consolidated Financial Statements (Unaudited)
 Note 12  Related Party Transactions (Continued)
  Note 13  Subsequent Events
   21




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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 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; and
    
    general economic conditions in the markets in which we operate.
   22




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Item 2.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations
 Overview
    23




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Item 2.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations
 Critical Accounting Policies
    24




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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 September 30, 2005 and 2004.
 Net Income
  Interest Income
   25




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Item 2.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations
  2005
    
    
    2004Average
    
    
    
    
    
    
    Yield/
    
    
    Average
    
    
    
    
    
    
    Yield/Balance
    
    
    Interest
    
    
    Rate
    
    
    Balance
    
    
    Interest
    
    
    RateInterest earning assets:Manufactured housing loans1
    
    $
    696,151
    
    
    $
    14,329
    
    
    
    8.23
    %
    
    $
    493,402
    
    
    $
    10,359
    
    
    
    8.40
    %Investment securities
    
    
    41,298
    
    
    
    973
    
    
    
    9.42
    %
    
    
    35,114
    
    
    
    798
    
    
    
    9.09
    %Other
    
    
    15,862
    
    
    
    106
    
    
    
    2.67
    %
    
    
    24,842
    
    
    
    55
    
    
    
    .89
    %Total
    
    $
    753,311
    
    
    $
    15,408
    
    
    
    8.18
    %
    
    $
    553,358
    
    
    $
    11,212
    
    
    
    8.10
    %Interest bearing liabilities2:Loan funding facilities
    
    $
    570,319
    
    
    $
    7,433
    
    
    
    5.21
    %
    
    $
    348,737
    
    
    $
    3,591
    
    
    
    4.12
    %Repurchase agreement -
investment securities
    
    
    24,263
    
    
    
    267
    
    
    
    4.40
    %
    
    
    21,554
    
    
    
    128
    
    
    
    2.38
    %Notes
payable - servicing
advances
    
    
    721
    
    
    
    14
    
    
    
    7.77
    %
    
    
    
    
    
    
    4
    
    
    
    N/ATotal
    
    $
    595,303
    
    
    $
    7,714
    
    
    
    5.18
    %
    
    $
    370,291
    
    
    $
    3,723
    
    
    
    4.02
    %Net interest income and
interest rate spread
    
    
    
    
    
    $
    7,694
    
    
    
    3.00
    %
    
    
    
    
    
    $
    7,489
    
    
    
    4.08
    %Net yield on average interest
earning assets
    
    
    
    
    
    
    
    
    
    
    4.09
    %
    
    
    
    
    
    
    
    
    
    
    5.41
    %
 
 1
    
    Net of loan servicing fees.2
    
    Includes facility fees. 26




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##### 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
    
    $
    4,173
    
    
    $
    (203
    )
    
    $
    3,970Investment securities
    
    
    146
    
    
    
    29
    
    
    
    175Other
    
    
    (60
    )
    
    
    111
    
    
    
    51Total interest income
    
    $
    4,259
    
    
    $
    (63
    )
    
    $
    4,196Interest bearing liabilities:Loan funding facilities
    
    $
    2,888
    
    
    $
    954
    
    
    $
    3,842Repurchase agreement -
investment securities
    
    
    30
    
    
    
    109
    
    
    
    139Notes
payable - servicing
advances
    
    
    10
    
    
    
    
    
    
    
    10Total interest expense
    
    $
    2,928
    
    
    $
    1,063
    
    
    $
    3,991Increase in net interest income
    
    
    
    
    
    
    
    
    
    $
    205
 Non-interest Income
  Provision for Losses
  27




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##### Table of Contents



Item 2.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations
   Non-interest Expenses
     28




---



##### Table of Contents



Item 2.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations
  29




---



##### Table of Contents



Item 2.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations
 Comparison of the nine months ended September 30, 2005 and 2004.
 Net Income
  Interest Income
   30




---



##### Table of Contents



Item 2.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations
  2005
    
    
    2004Average
    
    
    
    
    
    
    Yield/
    
    
    Average
    
    
    
    
    
    
    Yield/Balance
    
    
    Interest
    
    
    Rate
    
    
    Balance
    
    
    Interest
    
    
    RateInterest earning assets:Manufactured housing loans1
    
    $
    642,902
    
    
    $
    40,097
    
    
    
    8.32
    %
    
    $
    436,685
    
    
    $
    28,321
    
    
    
    8.65
    %Investment securities
    
    
    40,143
    
    
    
    2,803
    
    
    
    9.31
    %
    
    
    25,217
    
    
    
    1,560
    
    
    
    8.25
    %Other
    
    
    16,312
    
    
    
    296
    
    
    
    2.42
    %
    
    
    17,864
    
    
    
    135
    
    
    
    1.01
    %Total
    
    $
    699,357
    
    
    $
    43,196
    
    
    
    8.24
    %
    
    $
    479,766
    
    
    $
    30,016
    
    
    
    8.34
    %Interest bearing liabilities2:Loan funding facilities
    
    $
    517,515
    
    
    $
    19,115
    
    
    
    4.92
    %
    
    $
    321,687
    
    
    $
    9,749
    
    
    
    4.04
    %Repurchase agreement -
investment securities
    
    
    22,337
    
    
    
    653
    
    
    
    3.90
    %
    
    
    16,482
    
    
    
    254
    
    
    
    2.05
    %Notes
payable - servicing
advances
    
    
    623
    
    
    
    37
    
    
    
    7.92
    %
    
    
    739
    
    
    
    34
    
    
    
    6.13
    %Total
    
    $
    540,475
    
    
    $
    19,805
    
    
    
    4.89
    %
    
    $
    338,908
    
    
    $
    10,037
    
    
    
    3.95
    %Net interest income and
interest rate spread
    
    
    
    
    
    $
    23,391
    
    
    
    3.35
    %
    
    
    
    
    
    $
    19,979
    
    
    
    4.39
    %Net yield on average interest
earning assets
    
    
    
    
    
    
    
    
    
    
    4.46
    %
    
    
    
    
    
    
    
    
    
    
    5.55
    %
 
 1
    
    Net of loan servicing fees.2
    
    Includes facility fees. 31




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##### 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
    
    $
    12,861
    
    
    $
    (1,085
    )
    
    $
    11,776Investment securities
    
    
    1,042
    
    
    
    201
    
    
    
    1,243Other
    
    
    (28
    )
    
    
    189
    
    
    
    161Total interest income
    
    $
    13,875
    
    
    $
    (695
    )
    
    $
    13,180Interest bearing liabilities:Loan funding facilities
    
    $
    7,233
    
    
    $
    2,133
    
    
    $
    9,366Repurchase agreement -
investment securities
    
    
    171
    
    
    
    228
    
    
    
    399Notes
payable - servicing
advances
    
    
    (7
    )
    
    
    10
    
    
    
    3Total interest expense
    
    $
    7,397
    
    
    $
    2,371
    
    
    $
    9,768Increase in net interest income
    
    
    
    
    
    
    
    
    
    $
    3,412
 Non-interest Income
  Provision for Losses
  32




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##### Table of Contents



Item 2.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations
   Non-interest Expenses
     33




---



##### Table of Contents



Item 2.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations
  34




---



##### Table of Contents



Item 2.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations
 Receivable Portfolio and Asset Quality
    35




---



##### Table of Contents



Item 2.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations
  September 30,
    
    
    December 31,2005
    
    
    2004Principal balance loans receivable
    
    $
    733,592
    
    
    $
    572,973Number of loans receivable
    
    
    16,463
    
    
    
    13,358Average loan balance
    
    $
    45
    
    
    $
    43Weighted average loan coupon (a)
    
    
    9.60
    %
    
    
    9.86
    %Weighted average initial term
    
    20 years
    

    20 years
 
 (a)
    
    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.  September 30, 2005
    
    
    December 31, 2004No. of
    
    
    Principal
    
    
    % of
    
    
    No. of
    
    
    Principal
    
    
    % ofDays delinquent
    
    Loans
    
    
    Balance
    
    
    Portfolio
    
    
    Loans
    
    
    Balance
    
    
    Portfolio31-60
    
    
    201
    
    
    $
    7,238
    
    
    
    1.0
    %
    
    
    146
    
    
    $
    5,253
    
    
    
    0.9
    %61-90
    
    
    72
    
    
    
    2,618
    
    
    
    0.4
    %
    
    
    80
    
    
    
    3,014
    
    
    
    0.5
    %Greater than 90
    
    
    177
    
    
    
    7,190
    
    
    
    1.0
    %
    
    
    195
    
    
    
    7,637
    
    
    
    1.3
    %
   36




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##### Table of Contents



Item 2.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations
   37




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##### Table of Contents



Item 2.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations
   Loan
Pool Unpaid Principal Balance ($ in millions)
 2001
and Prior
    
    

2002
and
Subsequent
    
    
    TotalSeptember 30, 2004:$
    
    $
    73.5
    
    
    $
    466.7
    
    
    $
    540.2% of Total
    
    
    13.6
    %
    
    
    86.4
    %
    
    
    100.0
    %September 30, 2005:$
    
    $
    59.7
    
    
    $
    682.3
    
    
    $
    742.0
    *% of Total
    
    
    8.0
    %
    
    
    92.0
    %
    
    
    100.0
    %
 
 *
    
    Includes owned portfolio, repossessed inventory and bans sold with recourse. Static Pool Performance September 30, 2004 to September 30, 2005 ($ in millions)
 2001
and Prior
    
    

2002
and
Subsequent# Units Defaulted
    
    
    278
    
    
    
    283$s Defaulted
    
    $
    9.8
    
    
    $
    11.2Net Recovery%
    
    
    39
    %
    
    
    50
    %
   38




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##### Table of Contents



Item 2.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations
 Liquidity and Capital Resources
     39




---



##### Table of Contents



Item 2.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations
     40




---



##### Table of Contents



Item 2.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations
    41




---



##### Table of Contents



Item 3.
    
    Quantitative and Qualitative Disclosures About Market Risk
   42




---



##### 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
    
    $
    2,341
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    2,341Restricted cash
    
    
    13,532
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    13,532Loans receivable, net
    
    
    2,907
    
    
    
    9,150
    
    
    
    61,605
    
    
    
    645,943
    
    
    
    719,605Investments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    41,642
    
    
    
    41,642Furniture, fixtures and equipment, net
    
    
    268
    
    
    
    838
    
    
    
    2,244
    
    
    
    
    
    
    
    3,350Goodwill
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    32,277
    
    
    
    32,277Other assets
    
    
    13,187
    
    
    
    6,976
    
    
    
    4,206
    
    
    
    2,360
    
    
    
    26,729Total assets
    
    $
    32,235
    
    
    $
    16,964
    
    
    $
    68,055
    
    
    $
    722,222
    
    
    $
    839,476Liabilities and Stockholders EquityWarehouse financing
    
    $
    594
    
    
    $
    146,320
    
    
    $
    
    
    
    $
    
    
    
    $
    146,914Securitization financing
    
    
    1,790
    
    
    
    5,635
    
    
    
    37,933
    
    
    
    397,733
    
    
    
    443,091Repurchase agreements
    
    
    25,036
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    25,036Notes payable  servicing advances
    
    
    1,539
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,539Recourse liability
    
    
    15

    
    
    

    40
    
    
    
    136
    
    
    
    103
    
    
    
    294Other liabilities
    
    
    22,692
    
    
    
    316
    
    
    
    
    
    
    
    979
    
    
    
    23,987Total liabilities
    
    
    51,666
    
    
    
    152,311
    
    
    
    38,069
    
    
    
    398,815
    
    
    
    640,861Preferred stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    125
    
    
    
    125Common stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    255
    
    
    
    255Paid-in-capital
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    220,826
    
    
    
    220,826Accumulated other comprehensive loss
    
    
    1,351
    
    
    
    (317
    )
    
    
    (1,082
    )
    
    
    (430
    )
    
    
    (478
    )Unearned stock compensation
    
    
    (602
    )
    
    
    (1,244
    )
    
    
    (1,198
    )
    
    
    
    
    
    
    (3,044
    )Retained deficit
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (19,069
    )
    
    
    (19,069
    )Total stockholders equity
    
    
    749
    
    
    
    (1,561
    )
    
    
    (2,280
    )
    
    
    201,707
    
    
    
    198,615Total liabilities and stockholders equity
    
    $
    52,415
    
    
    $
    150,750
    
    
    $
    35,789
    
    
    $
    600,522
    
    
    $
    839,476Interest sensitivity gap
    
    $
    (20,180
    )
    
    $
    (133,786
    )
    
    $
    32,266
    
    
    $
    121,700Cumulative interest sensitivity gap
    
    $
    (20,180
    )
    
    $
    (153,966
    )
    
    $
    (121,700
    )
    
    
    Cumulative interest sensitivity gap to
total interest earning assets
    
    
    (2.40
    %)
    
    
    (18.34
    %)
    
    
    (14.50
    %)
    
    
    
 43




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##### Table of Contents



Item 3.
    
    Quantitative and Qualitative Disclosures About Market Risk
    44




---



##### Table of Contents



Item 3.
    
    Quantitative and Qualitative Disclosures About Market Risk
  Contractual MaturityThere-2005
    
    
    2006
    
    
    2007
    
    
    2008
    
    
    2009
    
    
    after
    
    
    TotalInterest sensitive assetsLoans receivable
    
    $
    2,907
    
    
    $
    12,349
    
    
    $
    13,588
    
    
    $
    14,952
    
    
    $
    16,452
    
    
    $
    659,357
    
    
    $
    719,605Average interest rate
    
    
    9.60
    %
    
    
    9.60
    %
    
    
    9.60
    %
    
    
    9.60
    %
    
    
    9.60
    %
    
    
    9.60
    %
    
    
    9.60
    %Interest bearing deposits
    
    
    15,625
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    15,625Average interest rate
    
    
    2.42
    %
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2.42
    %Investments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    41,642
    
    
    
    41,642Average interest rate
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    9.31
    %
    
    
    9.31
    %Total interest sensitive
assets
    
    $
    18,532
    
    
    $
    12,349
    
    
    $
    13,588
    
    
    $
    14,952
    
    
    $
    16,452
    
    
    $
    700,999
    
    
    $
    776,872Interest sensitive liabilitiesWarehouse financing
    
    $
    594
    
    
    $
    146,320
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    146,914Average interest rate
    
    
    4.87
    %
    
    
    4.87
    %
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4.87
    %Securitization financing
    
    
    1,790
    
    
    
    7,604
    
    
    
    8,367
    
    
    
    9,206
    
    
    
    10,130
    
    
    
    405,994
    
    
    
    443,091Average interest rate
    
    
    4.94
    %
    
    
    4.94
    %
    
    
    4.94
    %
    
    
    4.94
    %
    
    
    4.94
    %
    
    
    4.94
    %
    
    
    4.94
    %Repurchase agreements
    
    
    25,036
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    25,036Average interest rate
    
    
    3.90
    %
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3.90
    %Note payable
- servicing
advance
    
    
    1,539
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,539Average interest rate
    
    
    7.93
    %
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    7.93
    %Recourse liability
    
    
    15
    
    
    
    53
    
    
    
    42
    
    
    
    35
    
    
    
    29
    
    
    
    120
    
    
    
    294Average interest rate
    
    
    10.97
    %
    
    
    10.97
    %
    
    
    10.97
    %
    
    
    10.97
    %
    
    
    10.97
    %
    
    
    10.97
    %
    
    
    10.97
    %Total interest sensitive
liabilities
    
    $
    28,974
    
    
    $
    153,977
    
    
    $
    8,409
    
    
    $
    9,241
    
    
    $
    10,159
    
    
    $
    406,114
    
    
    $
    616,874
 45




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##### Table of Contents



Item 4.
    
    Controls and Procedures
        .
 46




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##### Table of Contents



PART II            OTHER INFORMATION
 
 ITEM 6. Exhibits and Reports on Form 8-K
  Exhibit No.
    
    Description
    
    Method of Filing1.1
    
    Sales Agreement between Origen
Financial, Inc. and Brinson Patrick
Securities Corporation
    
    
    (1
    )4.1
    
    Form of Senior Indenture
    
    
    (1
    )4.2
    
    Form of Subordinated Indenture
    
    
    (1
    )31.1
    
    Certification of Chief Executive
Officer Required by Rule 13a-14(a) of
the Securities Exchange Act of 1934, as
amended.
    
    
    (2
    )31.2
    
    Certification of Chief Financial
Officer Required by Rule 13a-14(a) of
the Securities Exchange Act of 1934, as
amended.
    
    
    (2
    )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.
    
    
    (2
    )
 
 (1)
    
    Incorporated by reference to Origen Financial, Inc.s Registration Statement on Form
S-3 No. 33-127931.(2)
    
    Filed herewith.     47




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##### Table of Contents



SIGNATURES
  Dated: November 14, 2005ORIGEN FINANCIAL, INC.BY:
    
    /s/ W. Anderson Geater, Jr.W. Anderson Geater, Jr., ChiefFinancial Officer and Secretary(Duly authorized officer and principal financial officer)
 48




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##### Table of Contents



ORIGEN FINANCIAL, INC.
 
 EXHIBIT INDEX
 Exhibit No.
    
    Description
    
    Method of Filing1.1
    
    Sales Agreement between Origen
Financial, Inc. and Brinson Patrick
Securities Corporation
    
    
    (1
    )4.1
    
    Form of Senior Indenture
    
    
    (1
    )4.2
    
    Form of Subordinated Indenture
    
    
    (1
    )31.1
    
    Certification of Chief Executive
Officer Required by Rule 13a-14(a) of
the Securities Exchange Act of 1934, as
amended.
    
    
    (2
    )31.2
    
    Certification of Chief Financial
Officer Required by Rule 13a-14(a) of
the Securities Exchange Act of 1934, as
amended.
    
    
    (2
    )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.
    
    
    (2
    )
 
 (1)
    
    Incorporated by reference to Origen Financial, Inc.s Registration Statement on Form
S-3 No. 33 127931.(2)
    
    Filed herewith.