##### 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, 2007.
 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
 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, 2007 and
December 31, 2006
    
    
    3Consolidated Statements of Operations for the periods
ended September 30, 2007 and 2006
    
    
    4Consolidated Statements of Comprehensive Income (Loss) for the periods
ended September 30, 2007 and 2006
    
    
    5Consolidated Statements of Cash Flows for the nine months
ended September 30, 2007 and 2006
    
    
    6Notes to Consolidated Financial Statements
    
    
    7Item 2.
    
    Managements Discussion and Analysis of Financial Condition
and Results of Operations
    
    
    19Item 3.
    
    Quantitative and Qualitative Disclosures about Market Risk
    
    
    30Item 4.
    
    Controls and Procedures
    
    
    32Part II
    
    Other InformationItem 6.
    
    Exhibits
    
    
    33Signatures
    
    
    34Certification of Chief Executive Officer Required by Rule 13a-14(a)Certification of Chief Financial Officer Required by Rule 13a-14(a)Certification of Chief Executive Officer and Chief Financial Officer Required by Rule 13a-14(b)
  2




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##### Table of Contents



Part I. Financial Information
 
 Item 1. Financial Statements
 Origen Financial, Inc.
 
 Consolidated Balance Sheets
 (In thousands, except share data)
 As of September 30, 2007 and December 31, 2006
 September 30,
    
    
    December 31,2007
    
    
    2006(Unaudited)ASSETSAssetsCash and cash equivalents
    
    $
    14,824
    
    
    $
    2,566Restricted cash
    
    
    15,665
    
    
    
    15,412Investments held to maturity
    
    
    41,885
    
    
    
    41,538Loans receivable, net of allowance for losses of
$7,489 and $8,456 at September 30, 2007 and
December 31, 2006, respectively
    
    
    1,157,006
    
    
    
    950,226Servicing advances
    
    
    5,890
    
    
    
    7,741Servicing rights
    
    
    2,225
    
    
    
    2,508Furniture, fixtures and equipment, net
    
    
    3,132
    
    
    
    3,513Repossessed houses
    
    
    4,923
    
    
    
    3,046Goodwill
    
    
    32,277
    
    
    
    32,277Other assets
    
    
    15,144
    
    
    
    14,240Total assets
    
    $
    1,292,971
    
    
    $
    1,073,067LIABILITIES AND STOCKHOLDERS EQUITYLiabilitiesWarehouse financing
    
    $
    238,687
    
    
    $
    131,520Securitization financing
    
    
    786,971
    
    
    
    685,013Repurchase agreements
    
    
    16,894
    
    
    
    23,582Notes payable  related party
    
    
    14,445
    
    
    
    Notes payable  servicing advances
    
    
    
    
    
    
    2,185Other liabilities
    
    
    31,303
    
    
    
    26,303Total liabilities
    
    
    1,088,300
    
    
    
    868,603Stockholders EquityPreferred stock, $.01 par value, 10,000,000 shares
authorized; 125 shares issued and outstanding at
September 30, 2007 and December 31, 2006, $1,000
per share liquidation preference
    
    
    125
    
    
    
    125Common stock, $.01 par value, 125,000,000 shares
authorized; 25,993,823 and 25,865,401 shares issued
and outstanding at September 30, 2007 and December
31, 2006, respectively
    
    
    260
    
    
    
    259Additional paid-in-capital
    
    
    221,323
    
    
    
    219,759Accumulated other comprehensive loss
    
    
    (4,685
    )
    
    
    (625
    )Distributions in excess of earnings
    
    
    (12,352
    )
    
    
    (15,054
    )Total stockholders equity
    
    
    204,671
    
    
    
    204,464Total liabilities and stockholders equity
    
    $
    1,292,971
    
    
    $
    1,073,067
 The accompanying notes are an integral part of these financial statements.
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Origen Financial, Inc.
 
 Consolidated Statements of Operations (Unaudited)
 (In thousands, except share data)
 For the periods ended September 30, 2007 and 2006
 Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2007
    
    
    2006
    
    
    2007
    
    
    2006Interest IncomeTotal interest income
    
    $
    23,656
    
    
    $
    18,807
    
    
    $
    67,063
    
    
    $
    54,072Total interest expense
    
    
    15,628
    
    
    
    11,451
    
    
    
    42,637
    
    
    
    31,328Net interest income before loan losses
    
    
    8,028
    
    
    
    7,356
    
    
    
    24,426
    
    
    
    22,744Provision for loan losses
    
    
    2,191
    
    
    
    1,598
    
    
    
    5,785
    
    
    
    4,924Net interest income after loan losses
    
    
    5,837
    
    
    
    5,758
    
    
    
    18,641
    
    
    
    17,820Non-interest incomeServicing income
    
    
    4,728
    
    
    
    3,635
    
    
    
    13,331
    
    
    
    10,608Other
    
    
    904
    
    
    
    727
    
    
    
    2,597
    
    
    
    2,142Total non-interest income
    
    
    5,632
    
    
    
    4,362
    
    
    
    15,928
    
    
    
    12,750Non-interest ExpensesPersonnel
    
    
    5,946
    
    
    
    5,719
    
    
    
    18,863
    
    
    
    17,986Loan origination and servicing
    
    
    395
    
    
    
    402
    
    
    
    1,454
    
    
    
    1,114State business taxes
    
    
    115
    
    
    
    76
    
    
    
    352
    
    
    
    251Other operating
    
    
    2,234
    
    
    
    2,169
    
    
    
    6,579
    
    
    
    6,327Total non-interest expense
    
    
    8,690
    
    
    
    8,366
    
    
    
    27,248
    
    
    
    25,678Net income before income taxes and
cumulative effect of change in
accounting principle
    
    
    2,779
    
    
    
    1,754
    
    
    
    7,321
    
    
    
    4,892Income tax benefit
    
    
    (51
    )
    
    
    
    
    
    
    (43
    )
    
    
    Net income before cumulative effect
of change in accounting principle
    
    
    2,830
    
    
    
    1,754
    
    
    
    7,364
    
    
    
    4,892Cumulative effect of change in
accounting principle
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    46NET INCOME
    
    $
    2,830
    
    
    $
    1,754
    
    
    $
    7,364
    
    
    $
    4,938Weighted average common shares
outstanding, basic
    
    
    25,365,778
    
    
    
    25,203,558
    
    
    
    25,289,680
    
    
    
    25,099,157Weighted average common shares
outstanding, diluted
    
    
    25,431,398
    
    
    
    25,247,421
    
    
    
    25,382,607
    
    
    
    25,174,272Earnings per common share before
cumulative effect of change in
accounting principle:Basic
    
    $
    0.11
    
    
    $
    0.07
    
    
    $
    0.29
    
    
    $
    0.19Diluted
    
    $
    0.11
    
    
    $
    0.07
    
    
    $
    0.29
    
    
    $
    0.19Earnings per common share:Basic
    
    $
    0.11
    
    
    $
    0.07
    
    
    $
    0.29
    
    
    $
    0.20Diluted
    
    $
    0.11
    
    
    $
    0.07
    
    
    $
    0.29
    
    
    $
    0.20
 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 September 30, 2007 and 2006
 Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2007
    
    
    2006
    
    
    2007
    
    
    2006Net income
    
    $
    2,830
    
    
    $
    1,754
    
    
    $
    7,364
    
    
    $
    4,938Other comprehensive loss:Net unrealized losses on interest rate swaps
    
    
    (10,401
    )
    
    
    (4,790
    )
    
    
    (3,801
    )
    
    
    (1,942
    )Reclassification adjustment for net gains
included in net income
    
    
    (35
    )
    
    
    (2
    )
    
    
    (259
    )
    
    
    (9
    )Total other comprehensive loss
    
    
    (10,436
    )
    
    
    (4,792
    )
    
    
    (4,060
    )
    
    
    (1,951
    )Comprehensive income (loss)
    
    $
    (7,606
    )
    
    $
    (3,038
    )
    
    $
    3,304
    
    
    $
    2,987
 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 nine months ended September 30, 2007 and 2006
 2007
    
    
    2006Cash Flows From Operating ActivitiesNet income
    
    $
    7,364
    
    
    $
    4,938Adjustments to reconcile net income to cash provided by
operating activities:Provision for loan losses
    
    
    5,785
    
    
    
    4,924Investment impairment
    
    
    
    
    
    
    114Depreciation and amortization
    
    
    4,012
    
    
    
    4,502Compensation expense recognized under share-based
compensation plans
    
    
    1,189
    
    
    
    1,409Cumulative effect of change in accounting principal
    
    
    
    
    
    
    (46
    )Proceeds from loan sales
    
    
    
    
    
    
    772Decrease in servicing advances
    
    
    1,851
    
    
    
    1,960Increase in other assets
    
    
    (6,592
    )
    
    
    (6,107
    )Increase (decrease) in accounts payable and other liabilities
    
    
    1,087
    
    
    
    (606
    )Net cash provided by operating activities
    
    
    14,696
    
    
    
    11,860Cash Flows From Investing ActivitiesIncrease in restricted cash
    
    
    (253
    )
    
    
    (232
    )Origination and purchase of loans
    
    
    (298,611
    )
    
    
    (214,548
    )Principal collections on loans
    
    
    77,985
    
    
    
    63,990Proceeds from sale of repossessed houses
    
    
    8,047
    
    
    
    8,661Capital expenditures
    
    
    (482
    )
    
    
    (506
    )Net cash used in investing activities
    
    
    (213,314
    )
    
    
    (142,635
    )Cash Flows From Financing ActivitiesNet proceeds from issuance of common stock
    
    
    121
    
    
    
    Retirement of common stock
    
    
    (331
    )
    
    
    (288
    )Dividends paid
    
    
    (4,662
    )
    
    
    (1,542
    )Proceeds upon termination of hedging transaction
    
    
    672
    
    
    
    1,418Payment upon termination of hedging transaction
    
    
    (57
    )
    
    
    Proceeds from securitization financing
    
    
    184,389
    
    
    
    200,646Repayment of securitization financing
    
    
    (82,550
    )
    
    
    (69,276
    )Repayment of advances under repurchase agreements
    
    
    (6,688
    )
    
    
    Proceeds from warehouse financing
    
    
    301,255
    
    
    
    201,868Repayment of warehouse financing
    
    
    (194,088
    )
    
    
    (206,261
    )Proceeds from notes payable  related party
    
    
    15,000
    
    
    
    Change in notes payable  servicing advances, net
    
    
    (2,185
    )
    
    
    (754
    )Net cash provided by financing activities
    
    
    210,876
    
    
    
    125,811NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
    
    
    12,258
    
    
    
    (4,964
    )Cash and cash equivalents, beginning of period
    
    
    2,566
    
    
    
    8,307Cash and cash equivalents, end of period
    
    $
    14,824
    
    
    $
    3,343Supplemental disclosures of cash flow information:Cash paid for interest
    
    $
    41,314
    
    
    $
    30,849Cash paid for income taxes
    
    $
    25
    
    
    $
    Non-cash financing activities:Non-vested common stock issued as unearned compensation
    
    $
    1,037
    
    
    $
    2,400Loans transferred to repossessed houses and held for sale
    
    $
    14,261
    
    
    $
    13,874
 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
 Accounting for Certain Hybrid Instruments
  Accounting for Servicing of Financial Assets
  7




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Origen Financial, Inc.
Notes to Consolidated Financial Statements (Unaudited)
 Note 2  Recent Accounting Pronouncements, continued:
 Accounting for Uncertainty in Income Taxes
  Fair Value Measurements
  Fair Value Option
  8




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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 30,2007
    
    
    2006
    
    
    2007
    
    
    2006Numerator:Net income
    
    $
    2,830
    
    
    $
    1,754
    
    
    $
    7,364
    
    
    $
    4,938Preferred stock dividends
    
    
    (4
    )
    
    
    (4
    )
    
    
    (12
    )
    
    
    (12
    )Income available to common
shareholders, basic
    
    $
    2,826
    
    
    $
    1,750
    
    
    $
    7,352
    
    
    $
    4,926Income available to common
shareholders, diluted
    
    $
    2,826
    
    
    $
    1,750
    
    
    $
    7,352
    
    
    $
    4,926Denominator:Weighted average common shares for
basic EPS
    
    
    25,366
    
    
    
    25,204
    
    
    
    25,290
    
    
    
    25,099Effect of dilutive securities:Incremental shares  non-vested stock
awards
    
    
    42
    
    
    
    43
    
    
    
    85
    
    
    
    75Incremental shares  stock purchase
warrants
    
    
    23
    
    
    
    
    
    
    
    8
    
    
    
    Weighted average common shares for
diluted EPS
    
    
    25,431
    
    
    
    25,247
    
    
    
    25,383
    
    
    
    25,174Basic EPS
    
    $
    0.11
    
    
    $
    0.07
    
    
    $
    0.29
    
    
    $
    0.20Diluted EPS
    
    $
    0.11
    
    
    $
    0.07
    
    
    $
    0.29
    
    
    $
    0.20
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Origen Financial, Inc.
Notes to Consolidated Financial Statements (Unaudited)
 Note 4 Investments
  Investments Accounted for Under the Provisions of SFAS No. 115
  Investments Accounted for Under the Provisions of SOP 03-3
  10




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Origen Financial, Inc.
Notes to Consolidated Financial Statements (Unaudited)
 Note 5  Loans Receivable
  September 30,
    
    
    December 31,2007
    
    
    2006Manufactured housing loans  securitized
    
    $
    940,524
    
    
    $
    825,811Manufactured housing loans  unsecuritized
    
    
    218,758
    
    
    
    130,828Accrued interest receivable
    
    
    6,144
    
    
    
    4,840Deferred loan origination costs
    
    
    4,718
    
    
    
    1,271Discount on purchased loans
    
    
    (4,736
    )
    
    
    (3,155
    )Allowance for purchased loans
    
    
    (913
    )
    
    
    (913
    )Allowance for loan losses
    
    
    (7,489
    )
    
    
    (8,456
    )$
    1,157,006
    
    
    $
    950,226
   No. of
    
    Principal
    
    % ofDays delinquent
    
    Loans
    
    Balance
    
    Portfolio31-60
    
    
    103
    
    
    $
    3,685
    
    
    
    3.2
    %61-90
    
    
    34
    
    
    
    1,260
    
    
    
    1.1
    %Greater than 90
    
    
    70
    
    
    
    2,747
    
    
    
    2.3
    %
 Note 6  Allowance for Credit Losses
  Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2007
    
    
    2006
    
    
    2007
    
    
    2006Balance at beginning of period
    
    $
    7,342
    
    
    $
    8,779
    
    
    $
    8,456
    
    
    $
    10,017Provision for loan losses
    
    
    2,191
    
    
    
    1,598
    
    
    
    5,785
    
    
    
    4,924Gross charge-offs
    
    
    (4,909
    )
    
    
    (4,202
    )
    
    
    (15,137
    )
    
    
    (12,825
    )Recoveries
    
    
    2,865
    
    
    
    2,237
    
    
    
    8,385
    
    
    
    6,296Balance at end of period
    
    $
    7,489
    
    
    $
    8,412
    
    
    $
    7,489
    
    
    $
    8,412
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Origen Financial, Inc.
Notes to Consolidated Financial Statements (Unaudited)
 Note 7 Debt
  September 30,
    
    
    December 31,2007
    
    
    2006Warehouse financing
    
    $
    238,687
    
    
    $
    131,520Securitization financing
    
    
    786,971
    
    
    
    685,013Repurchase agreements
    
    
    16,894
    
    
    
    23,582Notes payable  related party
    
    
    14,445
    
    
    
    Notes payable  servicing advances
    
    
    
    
    
    
    2,185$
    1,056,997
    
    
    $
    842,300
 Warehouse Financing  Citigroup
  Securitization Financing  2004-A Securitization
  Securitization Financing  2004-B Securitization
  12




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Origen Financial, Inc.
Notes to Consolidated Financial Statements (Unaudited)
 Note 7 Debt (Continued)
 Securitization Financing  2005-A Securitization
  Securitization Financing  2005-B Securitization
  Securitization Financing  2006-A Securitization
  Securitization Financing  2007-A Securitization
  13




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Origen Financial, Inc.
Notes to Consolidated Financial Statements (Unaudited)
 Note 7  Debt (Continued)
 Repurchase Agreements  Citigroup
  Notes Payable  Related Party
  Notes Payable  Servicing Advances
  14




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Origen Financial, Inc.
Notes to Consolidated Financial Statements (Unaudited)
 Note 7  Debt (Continued)
  September 30, 2007
    
    December 31, 2006Average
    
    Average
    
    Average
    
    AverageBalance
    
    Rate
    
    Balance
    
    RateWarehouse financing  Citigroup (1)
    
    $
    171,616
    
    
    
    7.2
    %
    
    $
    120,649
    
    
    
    7.0
    %Securitization financing  2004-A securitization
    
    
    107,109
    
    
    
    5.6
    %
    
    
    126,655
    
    
    
    5.4
    %Securitization financing  2004-B securitization
    
    
    108,581
    
    
    
    5.7
    %
    
    
    125,849
    
    
    
    5.5
    %Securitization financing  2005-A securitization
    
    
    121,613
    
    
    
    5.4
    %
    
    
    139,842
    
    
    
    5.2
    %Securitization financing  2005-B securitization
    
    
    131,389
    
    
    
    5.8
    %
    
    
    146,178
    
    
    
    5.7
    %Securitization financing  2006-A securitization
    
    
    184,026
    
    
    
    5.9
    %
    
    
    69,158
    
    
    
    6.0
    %Securitization financing  2007-A securitization
    
    
    100,642
    
    
    
    5.7
    %
    
    
    
    
    
    
    Repurchase agreements  Citigroup
    
    
    21,967
    
    
    
    6.2
    %
    
    
    23,582
    
    
    
    5.9
    %Notes payable  related party (2)
    
    
    1,003
    
    
    
    13.0
    %
    
    
    
    
    
    
    Notes payable  servicing advances (3)
    
    
    173
    
    
    
    14.4
    %
    
    
    447
    
    
    
    9.4
    %
 
 (1)
    
    Includes facility fees.(2)
    
    Includes the amortization of the fair value of the related stock purchase warrants.(3)
    
    Includes non-use fees.  Note 8  Share-Based Compensation Plan
  15




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Origen Financial, Inc.
Notes to Consolidated Financial Statements (Unaudited)
 Note 9  Derivative Instruments and Hedging Activity
    Cash Flow Hedge Instruments
  16




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Origen Financial, Inc.
Notes to Consolidated Financial Statements (Unaudited)
 Note 9  Derivative Instruments and Hedging Activity (Continued)
  Derivatives Not Designated as Hedge Instruments
  17




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Origen Financial, Inc.
Notes to Consolidated Financial Statements (Unaudited)
 Note 10  Stockholders Equity
      Note 11  Subsequent Events
   18




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##### Table of Contents



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;
    
    conditions in the asset-backed securities market generally and the manufactured housing
asset-backed securities market specifically, including rating agencies views on the
manufactured housing industry;
    
    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;
 
  Overview
  19




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##### Table of Contents



Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
 Recent Developments
   Critical Accounting Policies
    20




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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, 2007 and 2006
 Net Income
  Net
Interest Income
    2007
    
    
    2006Average
    
    
    
    
    
    
    Yield/
    
    
    Average
    
    
    
    
    
    
    Yield/Balance
    
    
    Interest
    
    
    Rate
    
    
    Balance
    
    
    Interest
    
    
    RateInterest earning assets:Manufactured housing loans (1)
    
    $
    1,121,697
    
    
    $
    22,460
    
    
    
    8.01
    %
    
    $
    877,190
    
    
    $
    17,637
    
    
    
    8.04
    %Investment securities
    
    
    41,263
    
    
    
    961
    
    
    
    9.32
    %
    
    
    41,229
    
    
    
    937
    
    
    
    9.09
    %Other interest earning assets
    
    
    22,534
    
    
    
    235
    
    
    
    4.17
    %
    
    
    16,665
    
    
    
    233
    
    
    
    5.59
    %Total
    
    $
    1,185,494
    
    
    $
    23,656
    
    
    
    7.98
    %
    
    $
    935,084
    
    
    $
    18,807
    
    
    
    8.05
    %Interest bearing liabilities:Loan funding facilities (2)
    
    $
    999,962
    
    
    $
    15,227
    
    
    
    6.09
    %
    
    $
    751,735
    
    
    $
    11,077
    
    
    
    5.89
    %Repurchase agreements
    
    
    18,893
    
    
    
    298
    
    
    
    6.31
    %
    
    
    23,582
    
    
    
    365
    
    
    
    6.19
    %Other interest bearing liabilities (3)
    
    
    3,133
    
    
    
    103
    
    
    
    13.15
    %
    
    
    367
    
    
    
    9
    
    
    
    9.81
    %Total
    
    $
    1,021,988
    
    
    $
    15,628
    
    
    
    6.12
    %
    
    $
    775,684
    
    
    $
    11,451
    
    
    
    5.90
    %Net interest income and interest rate spread
    
    
    
    
    
    $
    8,028
    
    
    
    1.86
    %
    
    
    
    
    
    $
    7,356
    
    
    
    2.15
    %Net yield on average interest earning assets (4)
    
    
    
    
    
    
    
    
    
    
    2.71
    %
    
    
    
    
    
    
    
    
    
    
    3.15
    %
 
 (1)
    
    Net of loan servicing fees.(2)
    
    Includes facility fees.(3)
    
    Includes non-use fees and the amortization of the fair value of the related stock purchase
warrants.(4)
    
    Amount is calculated as net interest income divided by total average interest earning assets. 21




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Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
  Volume
    
    
    Rate
    
    
    TotalInterest earning assets:Manufactured housing loans
    
    $
    4,916
    
    
    $
    (93
    )
    
    $
    4,823Investment securities
    
    
    1
    
    
    
    23
    
    
    
    24Other interest earning assets
    
    
    82
    
    
    
    (80
    )
    
    
    2Total interest income
    
    $
    4,999
    
    
    $
    (150
    )
    
    $
    4,849Interest bearing liabilities:Loan funding facilities
    
    $
    3,658
    
    
    $
    492
    
    
    $
    4,150Repurchase agreements
    
    
    (73
    )
    
    
    6
    
    
    
    (67
    )Other interest bearing liabilities
    
    
    68
    
    
    
    26
    
    
    
    94Total interest expense
    
    $
    3,653
    
    
    $
    524
    
    
    $
    4,177Increase in net interest income
    
    
    
    
    
    
    
    
    
    $
    672
 Non-interest Income
  Provision for Losses
  Non-interest Expenses
   22




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Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
 Results of Operations
 Comparison of the nine months ended September 30, 2007 and 2006
 Net Income
  Net Interest Income
    2007
    
    
    2006Average
    
    
    
    
    
    
    Yield/
    
    
    Average
    
    
    
    
    
    
    Yield/Balance
    
    
    Interest
    
    
    Rate
    
    
    Balance
    
    
    Interest
    
    
    RateInterest earning assets:Manufactured housing loans (1)
    
    $
    1,047,526
    
    
    $
    63,522
    
    
    
    8.09
    %
    
    $
    828,294
    
    
    $
    50,665
    
    
    
    8.16
    %Investment securities
    
    
    41,249
    
    
    
    2,874
    
    
    
    9.29
    %
    
    
    41,313
    
    
    
    2,814
    
    
    
    9.08
    %Other interest earning assets
    
    
    19,406
    
    
    
    667
    
    
    
    4.58
    %
    
    
    16,618
    
    
    
    593
    
    
    
    4.76
    %Total
    
    $
    1,108,181
    
    
    $
    67,063
    
    
    
    8.07
    %
    
    $
    886,225
    
    
    $
    54,072
    
    
    
    8.14
    %Interest bearing liabilities:Loan funding facilities (2)
    
    $
    924,976
    
    
    $
    41,503
    
    
    
    5.98
    %
    
    $
    705,377
    
    
    $
    30,270
    
    
    
    5.72
    %Repurchase agreements
    
    
    21,967
    
    
    
    1,018
    
    
    
    6.18
    %
    
    
    23,582
    
    
    
    1,026
    
    
    
    5.80
    %Other interest bearing liabilities (3)
    
    
    1,176
    
    
    
    116
    
    
    
    13.15
    %
    
    
    454
    
    
    
    32
    
    
    
    9.40
    %Total
    
    $
    948,119
    
    
    $
    42,637
    
    
    
    6.00
    %
    
    $
    729,413
    
    
    $
    31,328
    
    
    
    5.73
    %Net interest income and interest rate spread
    
    
    
    
    
    $
    24,426
    
    
    
    2.07
    %
    
    
    
    
    
    $
    22,744
    
    
    
    2.41
    %Net yield on average interest earning assets (4)
    
    
    
    
    
    
    
    
    
    
    2.94
    %
    
    
    
    
    
    
    
    
    
    
    3.42
    %
 
 (1)
    
    Net of loan servicing fees.(2)
    
    Includes facility fees.(3)
    
    Includes non-use fees and the amortization of the fair value of the related stock purchase
warrants.(4)
    
    Amount is calculated as net interest income divided by total average interest earning assets. 23




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Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
  Volume
    
    
    Rate
    
    
    TotalInterest earning assets:Manufactured housing loans
    
    $
    13,410
    
    
    $
    (553
    )
    
    $
    12,857Investment securities
    
    
    (4
    )
    
    
    64
    
    
    
    60Other interest earning assets
    
    
    99
    
    
    
    (25
    )
    
    
    74Total interest income
    
    $
    13,505
    
    
    $
    (514
    )
    
    $
    12,991Interest bearing liabilities:Loan funding facilities
    
    $
    9,424
    
    
    $
    1,809
    
    
    $
    11,233Repurchase agreements
    
    
    (70
    )
    
    
    62
    
    
    
    (8
    )Other interest bearing liabilities
    
    
    51
    
    
    
    33
    
    
    
    84Total interest expense
    
    $
    9,405
    
    
    $
    1,904
    
    
    $
    11,309Increase in net interest income
    
    
    
    
    
    
    
    
    
    $
    1,682
 Non-interest Income
  Provision for Losses
  Non-interest Expenses
    24




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Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
 Receivable Portfolio and Asset Quality
    September 30, 2007
    
    December 31, 2006Principal balance of loans receivable
    
    $
    1,159,282
    
    
    $
    956,639Number of loans receivable
    
    
    23,715
    
    
    
    20,300Average loan balance
    
    $
    49
    
    
    $
    47Weighted average loan coupon (1)
    
    
    9.44
    %
    
    
    9.50
    %Weighted average initial term
    
    20 years
    

    20 years
 
 (1)
    
    The weighted average loan coupon includes an embedded servicing fee rate resulting from the
securitization of the loans that are accounted for as financings.  September 30, 2007
    
    December 31, 2006No. of
    
    Principal
    
    % of
    
    No. of
    
    Principal
    
    % ofDays delinquent
    
    Loans
    
    Balance
    
    Portfolio
    
    Loans
    
    Balance
    
    Portfolio31 60
    
    
    232
    
    
    $
    8,999
    
    
    
    0.8
    %
    
    
    248
    
    
    $
    9,354
    
    
    
    1.0
    %61 90
    
    
    103
    
    
    
    3,461
    
    
    
    0.3
    %
    
    
    86
    
    
    
    3,159
    
    
    
    0.3
    %Greater than 90
    
    
    140
    
    
    
    5,620
    
    
    
    0.5
    %
    
    
    131
    
    
    
    5,416
    
    
    
    0.6
    %
    25




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##### Table of Contents



Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    Loan Pool Unpaid Principle Balance (dollars in thousands) (1)
 2002 and2001 and prior
    
    subsequentAt September 30, 2007Dollars
    
    $
    41,930
    
    
    $
    1,125,927Percentage of total
    
    
    3.6
    %
    
    
    96.4
    %At December 31, 2006Dollars
    
    $
    46,612
    
    
    $
    915,329Percentage of total
    
    
    4.8
    %
    
    
    95.2
    %
 Static Pool Performance (dollars in thousands) (1)
 2002 and2001 and prior
    
    subsequentNine Months Ended September 30, 2007Dollars defaulted
    
    $
    3,024
    
    
    $
    11,237Net losses
    
    $
    1,561
    
    
    $
    4,102Nine Months Ended September 30, 2006Dollars defaulted
    
    $
    4,055
    
    
    $
    9,819Net losses
    
    $
    3,495
    
    
    $
    5,507
 
 (1)
    
    Includes owned portfolio and repossessed inventory.  26




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




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




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




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Item 3. Quantitative and Qualitative Disclosures about Market Risk
    Expected Maturity0 to 3
    
    
    4 to 12
    
    
    1 to 5
    
    
    Over 5months
    
    
    months
    
    
    years
    
    
    years
    
    
    TotalAssetsCash and equivalents
    
    $
    14,824
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    14,824Restricted cash
    
    
    15,665
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    15,665Investments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    41,885
    
    
    
    41,885Loans receivable, net
    
    
    38,238
    
    
    
    110,353
    
    
    
    446,570
    
    
    
    561,845
    
    
    
    1,157,006Servicing advances
    
    
    3,150
    
    
    
    2,740
    
    
    
    
    
    
    
    
    
    
    
    5,890Servicing rights
    
    
    82
    
    
    
    239
    
    
    
    945
    
    
    
    959
    
    
    
    2,225Furniture, fixtures and equipment, net
    
    
    251
    
    
    
    783
    
    
    
    2,098
    
    
    
    
    
    
    
    3,132Repossessed houses
    
    
    2,462
    
    
    
    2,461
    
    
    
    
    
    
    
    
    
    
    
    4,923Goodwill
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    32,277
    
    
    
    32,277Other assets
    
    
    6,100
    
    
    
    1,825
    
    
    
    2,573
    
    
    
    4,646
    
    
    
    15,144Total assets
    
    $
    80,772
    
    
    $
    118,401
    
    
    $
    452,186
    
    
    $
    641,612
    
    
    $
    1,292,971Liabilities and Stockholders EquityWarehouse financing
    
    $
    59,672
    
    
    $
    179,015
    
    
    $
    
    
    
    $
    
    
    
    $
    238,687Securitization financing
    
    
    33,774
    
    
    
    93,053
    
    
    
    326,846
    
    
    
    333,298
    
    
    
    786,971Repurchase agreements
    
    
    16,894
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    16,894Notes payable  related party
    
    
    
    
    
    
    14,445
    
    
    
    
    
    
    
    
    
    
    
    14,445Other liabilities
    
    
    21,938
    
    
    
    2,689
    
    
    
    
    
    
    
    6,676
    
    
    
    31,303Total liabilities
    
    
    132,278
    
    
    
    289,202
    
    
    
    326,846
    
    
    
    339,974
    
    
    
    1,088,300Preferred stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    125
    
    
    
    125Common stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    260
    
    
    
    260Additional paid-in-capital
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    221,323
    
    
    
    221,323Accumulated other comprehensive loss
    
    
    34
    
    
    
    96
    
    
    
    687
    
    
    
    (5,502
    )
    
    
    (4,685
    )Distributions in excess of earnings
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (12,352
    )
    
    
    (12,352
    )Total stockholders equity
    
    
    34
    
    
    
    96
    
    
    
    687
    
    
    
    203,854
    
    
    
    204,671Total liabilities and stockholders equity
    
    $
    132,312
    
    
    $
    289,298
    
    
    $
    327,533
    
    
    $
    543,828
    
    
    $
    1,292,971Interest sensitivity gap
    
    $
    (51,540
    )
    
    $
    (170,897
    )
    
    $
    124,653
    
    
    $
    97,784Cumulative interest sensitivity gap
    
    $
    (51,540
    )
    
    $
    (222,437
    )
    
    $
    (97,784
    )
    
    
    Cumulative interest sensitivity gap to total assets
    
    
    (3.99
    )%
    
    
    (17.20
    )%
    
    
    (7.56
    )%
    
    
    
 30




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##### Table of Contents



Item 3. Quantitative and Qualitative Disclosures about Market Risk
       Interest Rate SensitivityThere-2007
    
    
    2008
    
    
    2009
    
    
    2010
    
    
    2011
    
    
    after
    
    
    TotalInterest sensitive assetsInterest bearing deposits
    
    $
    30,168
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    30,168Average interest rate
    
    
    4.58
    %
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4.58
    %Investments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    41,885
    
    
    
    41,885Average interest rate
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    9.29
    %
    
    
    9.29
    %Loans receivable, net
    
    
    38,238
    
    
    
    145,419
    
    
    
    129,843
    
    
    
    114,208
    
    
    
    100,267
    
    
    
    629,031
    
    
    
    1,157,006Average interest rate
    
    
    9.44
    %
    
    
    9.44
    %
    
    
    9.44
    %
    
    
    9.44
    %
    
    
    9.44
    %
    
    
    9.44
    %
    
    
    9.44
    %Derivative asset
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1
    
    
    
    1Average interest rate
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5.12
    %
    
    
    5.12
    %Total interest sensitive assets
    
    $
    68,406
    
    
    $
    145,419
    
    
    $
    129,843
    
    
    $
    114,208
    
    
    $
    100,267
    
    
    $
    670,917
    
    
    $
    1,229,060Interest sensitive liabilitiesWarehouse financing
    
    $
    59,672
    
    
    $
    179,015
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    238,687Average interest rate
    
    
    7.22
    %
    
    
    7.22
    %
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    7.22
    %Securitization financing
    
    
    33,774
    
    
    
    118,925
    
    
    
    94,569
    
    
    
    83,279
    
    
    
    70,572
    
    
    
    385,852
    
    
    
    786,971Average interest rate
    
    
    5.70
    %
    
    
    5.70
    %
    
    
    5.70
    %
    
    
    5.70
    %
    
    
    5.70
    %
    
    
    5.70
    %
    
    
    5.70
    %Repurchase agreements
    
    
    16,894
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    16,894Average interest rate
    
    
    6.18
    %
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6.18
    %Notes payable  related party
    
    
    
    
    
    
    14,445
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    14,445Average interest rate
    
    
    
    
    
    
    13.15
    %
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    13.15
    %Derivative liability
    
    
    1,706
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,635
    
    
    
    6,341Average interest rate
    
    
    5.30
    %
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5.30
    %
    
    
    5.30
    %Total interest sensitive
liabilities
    
    $
    112,046
    
    
    $
    312,385
    
    
    $
    94,569
    
    
    $
    83,279
    
    
    $
    70,572
    
    
    $
    390,487
    
    
    $
    1,063,338
 31




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Item 4. Controls and Procedures
   32




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##### Table of Contents



PART II            OTHER INFORMATION
 
 ITEM 6. Exhibits
 Exhibit No.
    
    Description
    
    Method of Filing4.1
    
    
    Stock Purchase Warrant dated
September 11, 2007 issued by Origen
Financial, Inc. in favor of the William
M. Davidson Trust u/a/d 12/13/04.
    
    
    (1
    )4.2
    
    
    Registration Rights Agreement dated
September 11, 2007 between Origen
Financial, Inc. and the William M.
Davidson Trust u/a/d 12/13/04.
    
    
    (1
    )10.1
    
    
    Senior Secured Loan Agreement dated
September 11, 2007 between Origen
Financial L.L.C. and the William M.
Davidson Trust u/a/d 12/13/04.
    
    
    (1
    )10.2
    
    
    Security Agreement dated September 11,
2007 among Origen Financial L.L.C.,
Origen Servicing, Inc. and the William
M. Davidson Trust u/a/d 12/13/04
    
    
    (1
    )10.3
    
    
    Senior Secured Promissory Note dated
September 11, 2007 issued by Origen
Financial L.L.C. in favor of the William
M. Davidson Trust u/a/d 12/13/04.
    
    
    (1
    )10.4
    
    
    Senior Secured Convertible Promissory
Note dated September 11, 2007 issued by
Origen Financial L.L.C. in favor of the
William M. Davidson Trust u/a/d
12/13/04.
    
    
    (1
    )10.5
    
    
    Guaranty dated September 11, 2007 issued
by Origen Servicing, Inc. and Origen
Financial, Inc. in favor of the William
M. Davidson Trust u/a/d 12/13/04.
    
    
    (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 Current Report on Form 8-K
dated September 11, 2007.(2)
    
    Filed herewith. 33




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##### Table of Contents



SIGNATURES
   ORIGEN FINANCIAL, INC.BY:
    /s/ W. Anderson Geater, Jr.W. Anderson Geater, Jr., ChiefFinancial Officer and Secretary
(Duly authorized officer and principal
financial officer) 34




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##### Table of Contents



ORIGEN FINANCIAL, INC.
 
 EXHIBIT INDEX
 Exhibit No.
    
    Description
    
    Method of Filing4.1
    
    
    Stock Purchase Warrant dated
September 11, 2007 issued by Origen
Financial, Inc. in favor of the William
M. Davidson Trust u/a/d 12/13/04.
    
    
    (1
    )4.2
    
    
    Registration Rights Agreement dated
September 11, 2007 between Origen
Financial, Inc. and the William M.
Davidson Trust u/a/d 12/13/04.
    
    
    (1
    )10.1
    
    
    Senior Secured Loan Agreement dated
September 11, 2007 between Origen
Financial L.L.C. and the William M.
Davidson Trust u/a/d 12/13/04.
    
    
    (1
    )10.2
    
    
    Security Agreement dated September 11,
2007 among Origen Financial L.L.C.,
Origen Servicing, Inc. and the William
M. Davidson Trust u/a/d 12/13/04
    
    
    (1
    )10.3
    
    
    Senior Secured Promissory Note dated
September 11, 2007 issued by Origen
Financial L.L.C. in favor of the William
M. Davidson Trust u/a/d 12/13/04.
    
    
    (1
    )10.4
    
    
    Senior Secured Convertible Promissory
Note dated September 11, 2007 issued by
Origen Financial L.L.C. in favor of the
William M. Davidson Trust u/a/d
12/13/04.
    
    
    (1
    )10.5
    
    
    Guaranty dated September 11, 2007 issued
by Origen Servicing, Inc. and Origen
Financial, Inc. in favor of the William
M. Davidson Trust u/a/d 12/13/04.
    
    
    (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 Current Report on Form 8-K
dated September 11, 2007.(2)
    
    Filed herewith. 35