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SECURITIES AND EXCHANGE COMMISSION  FORM 10-Q [X] Quarterly report pursuant to Section 13 or 15 (d) of the Securities
Exchange Act of 1934 FOR THE QUARTERLY PERIOD ENDED March 31, 2004. OR [  ] 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)
 Registrants telephone number, including area code: (248) 746-7000 Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [ ] No [X] Number of shares of Common Stock, $.01 par value, outstanding as of June 14,
2004: 25,118,400




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Origen Financial, Inc. Index  
 Part I
    
    Financial InformationPageItem 1.
    
    Financial Statements (Unaudited)Consolidated Balance
Sheets - as of March 31, 2004 and December 31, 2003
    
    
    3Consolidated Statements of Operations for the three months ended March 31, 2004 and 2003
    
    
    4Consolidated Statements of Comprehensive Income for the three months ended March 31, 2004 and 2003
    
    
    5Consolidated Statements of Cash Flows for the three months ended March 31, 2004 and 2003
    
    
    6Notes to Consolidated Financial Statements
    
    
    7Item 2.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    15Item 3.
    
    Quantitative and Qualitative Disclosures about Market Risk
    
    
    30Item 4.
    
    Controls and Procedures
    
    
    33Part II
    
    Other InformationItem 2.
    
    Changes in Securities and Use of Proceeds
    
    
    34Item 6.
    
    Exhibits and Reports on Form 8-K
    
    
    34Signatures
    
    
    35302 Certification of Chief Executive Officer302 Certification of Chief Financial Officer906 Certification of CEO & CFO




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##### Table of Contents



Part I 
 Item 1.
    
    Financial Statements
 Origen Financial, Inc. 
 Consolidated Balance Sheet(In thousands, except share data) March 31, 2004 and December 31, 2003 ASSETS (Unaudited)March 31,
    
    December 31,2004
    
    2003AssetsCash and equivalents
    
    $
    12,586
    
    
    $
    6,926Restricted cash
    
    
    6,539
    
    
    
    6,017Loans receivable, net of allowance for losses of
$4,151 and $3,614, respectively
    
    
    413,018
    
    
    
    368,509Investments
    
    
    31,543
    
    
    
    Furniture, fixtures and equipment, net
    
    
    2,337
    
    
    
    2,476Goodwill
    
    
    32,277
    
    
    
    32,277Other assets
    
    
    28,186
    
    
    
    28,337Total assets
    
    $
    526,486
    
    
    $
    444,542LIABILITIES AND STOCKHOLDERS EQUITYLiabilitiesWarehouse financing
    
    $
    157,924
    
    
    $
    Securitization financing
    
    
    193,942
    
    
    
    273,404Notes payable  servicing advances
    
    
    2,550
    
    
    
    4,037Recourse liability
    
    
    6,793
    
    
    
    8,740Other liabilities
    
    
    12,749
    
    
    
    15,572Total liabilities
    
    
    373,958
    
    
    
    301,753Stockholders EquityPreferred stock, $.01 par value, 10,000,000 shares
authorized; 125 and -0- shares issued and outstanding
at March 31, 2004 and December 31, 2003, respectively
    
    
    125
    
    
    
    Common stock, $.01 stated value, 125,000,000 shares
authorized; 16,060,000 and 15,060,000 shares issued and
outstanding at March 31, 2004 and December 31, 2003,
respectively
    
    
    165
    
    
    
    152Additional paid-in-capital
    
    
    155,796
    
    
    
    143,289Accumulated other comprehensive loss
    
    
    (5
    )
    
    
    (20
    )Unearned stock compensation
    
    
    (4,039
    )
    
    
    (1,114
    )Retained earnings
    
    
    486
    
    
    
    482Total stockholders equity
    
    
    152,528
    
    
    
    142,789Total liabilities and stockholders equity
    
    $
    526,486
    
    
    $
    444,542
 The accompanying notes are an integral part of these financial statements. 3




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Origen Financial, Inc. 
 Consolidated Statement of Operations (Unaudited)
(In thousands, except share data) For the three months ended March 31 2004
    
    2003Interest IncomeTotal interest income
    
    $
    9,101
    
    
    $
    5,368Total interest expense
    
    
    3,019
    
    
    
    2,684Net interest income before loan losses
    
    
    6,082
    
    
    
    2,684Provision for credit losses and recourse liability
    
    
    1,891
    
    
    
    624Net interest income after loan losses
    
    
    4,191
    
    
    
    2,060Non-Interest Income
    
    
    2,880
    
    
    
    2,046Non-Interest ExpensesPersonnel
    
    
    4,402
    
    
    
    4,212Loan origination and servicing
    
    
    352
    
    
    
    312State business taxes
    
    
    90
    
    
    
    Other operating
    
    
    1,597
    
    
    
    1,736Total non-interest expense
    
    
    6,441
    
    
    
    6,260NET INCOME (LOSS)
    
    $
    630
    
    
    $
    (2,154
    )Weighted average common shares outstanding
    
    
    15,686,374Weighted average common shares outstanding, diluted
    
    
    15,929,881Earnings per share:Basic
    
    $
    0.04Diluted
    
    $
    0.04
 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 (Unaudited)
(In thousands, except share data)
For the three months ended March 31 2004
    
    2003Net income (loss)
    
    $
    630
    
    
    $
    (2,154
    )Unrealized gain on interest rate swaps
    
    
    15
    
    
    
    Comprehensive income (loss)
    
    $
    645
    
    
    $
    (2,154
    )
 The accompanying notes are an integral part of these financial statements. 5




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Origen Financial, Inc. 
 Consolidated Statement of Cash Flows (Unaudited)
(In thousands, except share data) For the three months ended March 31 2004
    
    2003Cash Flows From Operating ActivitiesNet income (loss)
    
    $
    630
    
    
    $
    (2,154
    )Adjustments to reconcile net income (loss) to
cash used in operating activities:Provision for credit losses and recourse liability
    
    
    1,891
    
    
    
    624Depreciation and amortization
    
    
    1,191
    
    
    
    584Originations of loans held for sale
    
    
    (59,510
    )
    
    
    (40,026
    )Principal collections on loans held for sale
    
    
    11,355
    
    
    
    5,273(Increase) decrease in other assets
    
    
    (4,186
    )
    
    
    1,991Decrease in accounts payable and other liabilities
    
    
    (3,313
    )
    
    
    (2,796
    )Net cash used in operating activities
    
    
    (51,942
    )
    
    
    (36,504
    )Cash Flows From Investing ActivitiesPurchase of investment securities
    
    
    (31,360
    )
    
    
    Capital expenditures
    
    
    (65
    )
    
    
    (583
    )Net cash used in investing activities
    
    
    (31,425
    )
    
    
    (583
    )Cash Flows From Financing ActivitiesNet proceeds from issuance of preferred stock
    
    
    95
    
    
    
    Net proceeds from issuance of common stock
    
    
    9,624
    
    
    
    Proceeds from sale of repossessed homes
    
    
    2,341
    
    
    
    1,422Proceeds from warehouse and securitization financing
    
    
    370,643
    
    
    
    86,396Repayment of warehouse and securitization financing
    
    
    (292,189
    )
    
    
    (70,645
    )Proceeds from minority interest investment
    
    
    
    
    
    
    20,000Net change in notes payable  servicing advances
    
    
    (1,487
    )
    
    
    344Net cash provided by financing activities
    
    
    89,027
    
    
    
    37,517NET INCREASE IN CASH AND CASH EQUIVALENTS
    
    
    5,660
    
    
    
    430Cash and cash equivalents, beginning of year
    
    
    6,926
    
    
    
    257Cash and cash equivalents, end of year
    
    $
    12,586
    
    
    $
    687Supplemental disclosures of cash flow information:Interest paid
    
    $
    3,153
    
    
    $
    2,667Non cash financing activities:Restricted common stock issued as unearned compensation
    
    $
    3,300
    
    
    $
    
 The accompanying notes are an integral part of these financial statements. 6




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Origen Financial, Inc. 
 Notes to Consolidated Financial Statements (Unaudited) Note A  Basis of Presentation These unaudited condensed consolidated financial statements of Origen
Financial, Inc., a Delaware corporation (the Company) at March 31, 2004 and
for its predecessor Origen Financial, L.L.C. for the three months ended March
31, 2003, have been prepared pursuant to the Securities and Exchange Commission
(SEC) rules and regulations and should be read in conjunction with the
consolidated financial statements and notes thereto for the period ended
December 31, 2003, included in the Companys Registration Statement on Form
S-11 (Registration No. 333-112516) filed May 5, 2004 with respect to its
initial public offering. The following notes to consolidated financial
statements present interim disclosures as required by the SEC. The
accompanying consolidated financial statements reflect, in the opinion of
management, all adjustments necessary for a fair presentation of the interim
financial statements. All such adjustments are of a normal recurring nature.
Certain reclassifications have been made to prior periods financial statements
in order to conform with current period presentation. Results for interim
periods are not necessarily indicative of the results that may be expected for
a full year. The results of operations for the three months ended March 31, 2003 are those
of Origen Financial, Inc.s predecessor company, Origen Financial, L.L.C.
Origen Financial L.L.C. relied heavily on high cost short-term borrowings to
fund day-to-day operations due to a lack of significant permanent capital. This
lack of capital combined with losses incurred from underperforming loans
originated prior to year 2002 (referred to as legacy loans), resulted in
significant net operating losses prior to the commencement of Origen Financial,
Inc.s operations. Note B  Per Share Data Basic earnings per share are computed by dividing net income (loss) available
to common shareholders by the weighted average common shares outstanding.
Diluted earnings per share reflect the potential dilution that would occur if
dilutive securities were exercised or converted into common stock. The following table presents a reconciliation of the numerator (income
applicable to common shareholders) and denominator (weighted average common
shares outstanding) for the basic earnings per share calculation at March 31,
2004: EarningsShares
    
    per shareBasic earnings per share
    
    
    15,686,374
    
    
    $
    0.04Net dilutive effect of:Options
    
    
    
    
    
    
    Restricted stock awards
    
    
    243,507
    
    
    
    Diluted earnings per share
    
    
    15,929,881
    
    
    $
    0.04
 7




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Origen Financial, Inc. Notes to Consolidated Financial Statements (Unaudited) Note C  Stock Options The Company has elected to measure compensation cost using the intrinsic value
method in accordance with APB Opinion No. 25 Accounting for Stock Issued to
Employees. Accordingly, since all options were granted at a fixed price not
less than the fair market value of the Companys common stock on the date of
grant, no compensation cost has been recognized for its stock option plan. Had
stock option costs of the plan been determined based on the fair value at the
grant dates for awards under the plan consistent with the methodology of SFAS
123, the pro forma effects on the Companys net income and earnings per share
would be as follows for the period ended March 31, 2004 (in thousands except
income per share): Net income as reported
    
    $
    630Stock option compensation cost
    
    
    3Pro forma net income
    
    $
    627Basic income per share as reported
    
    $
    0.04Stock option compensation cost
    
    
    Pro forma basic income per share
    
    $
    0.04Diluted income per share as reported
    
    $
    0.04Stock option compensation cost
    
    
    Pro forma diluted income per share
    
    $
    0.04
 Note D  Investments The Company follows the provisions of Statement of Financial Accounting
Standards No. 115 (SFAS 115), Accounting For Certain Investments in Debt and
Equity Securities, in reporting its investments. At March 31, 2004 the
Companys investments consisted of a $31.5 million asset backed security. The
security is collateralized by manufactured home loans and is classified as
held-to-maturity. It has a contractual maturity date of July 28, 2033. The
security is carried on the Companys balance sheet at amortized cost which
approximates its market value at March 31, 2004. As prescribed under the provisions of SFAS 115, the Company has both the
intent and ability to hold the security to maturity. The security will not be
sold in response to changing market conditions, changing fund sources or terms,
changing availability and yields on alternative investments or for other
asset-liability management reasons. 8




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Origen Financial, Inc. Notes to Consolidated Financial Statements (Unaudited) Note E  Allowance for Credit Losses and Recourse Liability The allowance for credit losses and related additions and deductions to the
allowance were as follows for the period ended March 31 (in thousands): 2004
    
    2003Balance at beginning of period
    
    $
    3,614
    
    
    $
    2,743Provision for loan losses
    
    
    1,891
    
    
    
    624Transfers from recourse liability
    
    
    1,947
    
    
    
    1,233Gross chargeoffs
    
    
    (5,575
    )
    
    
    (3,304
    )Recoveries
    
    
    2,274
    
    
    
    1,466Balance at end of period
    
    $
    4,151
    
    
    $
    2,762
 The recourse liability and related additions and transfers out of the recourse
liability were as follows for the period ended March 31 (in thousands): 2004
    
    2003Balance at beginning of period
    
    $
    8,740
    
    
    $
    13,320Reimbursements for losses per recourse
agreements
    
    
    
    
    
    
    (663
    )Transfers to allowance for credit losses
    
    
    (1,947
    )
    
    
    (1,233
    )Balance at end of period
    
    $
    6,793
    
    
    $
    11,424
 Note F  Loan Securitizations Periodically the Company securitizes manufactured home loans. Under the
current legal structure of the securitization program, the Company sells
manufactured home loans it originates and purchases to a trust for cash. The
trust sells asset-backed bonds secured by the loans to investors. The Company
records certain assets and income based upon the difference between all
principal and interest received from the loans sold and the following factors:
(i) all principal and interest required to be passed through to the
asset-backed bond investors, (ii) all excess contractual servicing fees, (iii)
other recurring fees and (iv) an estimate of losses on loans. These loan securitizations may be structured as financing transactions as
opposed to sales transactions, typically by structuring the transaction to
allow the Company to participate in the auction process at the scheduled
termination of the existence of the qualified special purpose entity (the
trust). The Company structured all loan securitizations occurring before 2003
as loan sales and all loan securitizations in 2003 and 2004 as financings for
accounting purposes. When securitizations are structured as financings no gain
or loss is recognized, nor is any allocation made to residual interests or
servicing rights. Rather, the loans securitized continue to be carried by the
Company as assets, and the asset backed bonds secured by the loans are carried
as a liability. 9




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Origen Financial, Inc. Notes to Consolidated Financial Statements (Unaudited) Note F  Loan Securitizations (Continued) On February 11, 2004, the Company completed a securitized financing transaction
for approximately $240.0 million of loans, which was funded by issuing bonds in
the approximate amount of $200.0 million, at a duration weighted average
interest cost of 5.13%. The transaction was structured to issue classes of
bonds with different estimated maturity dates and average lives to better meet
investor demands. Approximately $176.7 million of the securitization proceeds
were used to reduce the aggregate balances of the notes outstanding under the
Companys short-term securitization facility. For securitizations accounted for as a sale the Company retains the right to
service the loans it sells. Fees for servicing the loans are based on a
contractual percentage per annum ranging from .5% to 1.25% of the unpaid
principal balance of the associated loans. The Company recognizes a servicing
asset in addition to its gain on sale of loans. The servicing asset is
calculated as the present value of the expected future net servicing income in
excess of adequate compensation for a substitute servicer, based on common
industry assumptions and the Companys historical experience. These factors
include default and prepayment speeds. There were no securitizations accounted
for as a sale during the three months ended March 31, 2004 or 2003. Servicing fees received with respect to prior securitizations accounted for as
a sale were approximately $528,000 for the period ended March 31, 2004. Total principal balance of loans serviced that the Company has securitized and
accounted for as a sale at March 31, 2004 was approximately $204.5 million.
Delinquency statistics (including repossessed inventory) on those loans are as
follows at March 31, 2004 (dollars in thousands): No. of
    
    Principal
    
    % ofDays delinquent
    
    Loans
    
    Balance
    
    Portfolio31-60
    
    
    120
    
    
    $
    4,954
    
    
    
    2.4
    %61-90
    
    
    40
    
    
    
    1,636
    
    
    
    0.8
    %Greater than 90
    
    
    338
    
    
    
    15,301
    
    
    
    7.5
    %
 The Company assesses the carrying value of the residual interests and servicing
assets for impairment on a monthly basis. There can be no assurance that the
Companys estimates used to determine the residual receivable and the servicing
asset valuations will remain appropriate for the life of the securitization.
If actual loan prepayments or defaults exceed the Companys estimates, the
carrying value of the Companys residual receivable and/or servicing asset may
decrease through a charge against earnings in the period management recognizes
the disparity. The Companys residual interest balance was approximately
$749,000 at March 31, 2004. There was no change in the balance for the period
presented. 10




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Origen Financial, Inc. Notes to Consolidated Financial Statements (Unaudited) Note G  Debt Total debt outstanding was as follows (in thousands): March 31,
    
    December 31,2004
    
    2003Warehouse financing
    
    $
    157,924
    
    
    $
    273,404Securitization financing
    
    
    193,942
    
    
    
    Notes payable  servicing advances
    
    
    2,550
    
    
    
    4,037$
    354,416
    
    
    $
    277,441
 Notes Payable  Citigroup- The Company through its operating subsidiary Origen
Financial, L.L.C., currently has a short term securitization facility with
Citigroup Global Markets Realty Corp. (Citigroup) (formerly Salomon Brothers
Realty Corporation). Under terms of the facility, originally entered into in
March 2003 and revised in November 2003, the Company is advanced funds and in
turn pledges as collateral manufactured home loans. On March 30, 2004 the
terms of the agreement were modified by segregating the pledged loans into
three separate pools designated 2004-1A, 2004-1B and 2004-1C. The maximum
advance amount on 2004-1A (for new loan production) was set at $170.0 million,
the fixed advance amount on 2004-1B (for loans originated in 2003) was set at
approximately $71.6 million and the maximum amount on 2003-1C (for loans
acquired from third parties) was set at $150.0 million. The modification added
a stratified advance rate for each pool and reduced the stated interest rate on
all three pools. The annual interest rate on the pools is a variable rate
equal to LIBOR plus a spread. Additionally, the maturity date was fixed on
2004-1A at March 29, 2005, on 2004-1B at November 16, 2004 and on 2004-1C at
March 28, 2006. On March 31, 2004, the advance rate was 84.0% of the eligible principal balance
of the manufactured home loans pledged to 2003-1A, 79.1% of the eligible
principal balance of the manufactured home loans pledged to 2003-1B and 74.2%
of the eligible principal balance of the manufactured home loans pledged to
2003-1C and the outstanding advance amounts were approximately $26.5 million on
2003-1A, $70.6 million on 2003-1B and $37.3 million on 2003-1C, for a total of
$134.4 million. Repurchase Agreement On March 14, 2004, the Company entered into a repurchase
agreement with Citigroup Global Markets, Inc. for the purpose of financing the
purchase of its investment in a $31.5 million asset backed security. Under the
terms of the agreement the Company sells its interest in the security with an
agreement to repurchase the security at a predetermined future date at the
principal amount sold plus an interest component. The security was sold at an
amount equal to 75% of the outstanding principal balance. At March 31, 2004
the repurchase agreement had an outstanding principal balance of approximately
$23.5 and an annual interest rate equal to LIBOR plus a spread. The agreement
has a current maturity date of April 28, 2004. 11




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Origen Financial, Inc. Notes to Consolidated Financial Statements (Unaudited) Note G  Debt (Continued) Notes Payable  2004-A Securitization -On February 11, 2004, the Company
completed a securitization of approximately $240.0 million in principal balance
of manufactured home loans. The securitization was accounted for as a
financing. Upon completion of the securitization the Company through a special
purpose entity, Origen Manufactured Housing Trust 2004-A issued $200.0 million
in notes payable. The notes are stratified into six different classes and pay
interest at a duration weighted average rate of approximately 5.13%. The notes
have a contractual maturity date of October 2013 with respect to the Class A-1
notes; August 2017, with respect to the Class A-2 notes; December 2020, with
respect to the Class A-3 notes; and January 2035, with respect to the Class
A-4, Class M-1 and Class M-2 notes. At March 31, 2004 the outstanding balance
of the notes was approximately $193.9 million. Notes Payable  Servicing Advances The Company currently has entered into a
revolving credit facility with Bank One, NA. Under the terms of the facility
the Company can borrow up to $7.0 million for the purpose of funding required
principal and interest advances on manufactured home loans that are serviced
for outside investors. Borrowings under the facility are repaid upon the
collection by the Company of monthly payments made by borrowers under such
manufactured home loans. The banks prime interest rate is payable on the
outstanding balance. To secure the loan from Bank One, the Company has granted
Bank One a security interest in substantially all its assets (excluding
securitized assets). The facility has a termination date of December 31, 2004. The average balance and average interest rate of outstanding debt was as
follows (in thousands): March 31, 2004
    
    December 31, 2003Average
    
    Average
    
    Average
    
    AverageBalance
    
    Rate
    
    Balance
    
    RateNotes payable  Citigroup
    
    $
    187,764
    
    
    
    4.2
    %
    
    $
    250,935
    
    
    
    4.2
    %Notes payable  2004-A securitization
    
    $
    197,165
    
    
    
    4.2
    %
    
    
    
    
    
    
    Repurchase agreement
    
    $
    23,520
    
    
    
    1.8
    %
    
    $
    2,699
    
    
    
    4.4
    %Note payable  - servicing advances
    
    $
    2,602
    
    
    
    5.1
    %
    
    
    
    
    
    
    
 Note H  Equity Incentive Plan Data pertaining to the Companys equity incentive plan with respect to stock
options is as follows: Options outstanding, December 31, 2003
    
    
    95,000Options granted
    
    
    198,000Option price
    
    $
    10.00Options exercised
    
    
    Option price
    
    
    Options forfeited
    
    
    3,500Option price
    
    $
    10.00Options outstanding, March 31, 2004
    
    
    289,500Option price
    
    $
    10.00Options exercisable, March 31, 2004
    
    
    
 12




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Origen Financial, Inc. Notes to Consolidated Financial Statements (Unaudited) Note H  Equity Incentive Plan (Continued) The Companys equity incentive plan has 1.1 million shares of common stock
reserved for issuance as either stock options or stock grants. Under the plan,
the exercise price of the options will not be less than the fair market value
of the common stock on the date of grant. The date on which the options are
first exercisable is determined by the administrator of the Companys stock
option plan, the Compensation Committee of the Board of Directors or the entire
Board of Directors, and options generally vest over a two-year period. As of
March 31, 2004, 289,500 options had been issued under the plan at an option
price of $10.00. The Company has adopted the disclosure requirements of Statement of Financial
Accounting Standards No. (SFAS 123), Accounting for Stock Based
compensation. Accordingly, the fair value of each option granted in 2004 was
estimated using the Cox, Ross & Rubenstein binomial option-pricing model based
on the assumptions stated below: Estimated weighted average fair value per
share of options granted
    
    $
    0.40Assumptions:Annualized dividend yield
    
    
    12.00
    %Common stock price volatility
    
    
    15.00
    %Weighted average risk free rate of return
    
    
    4.00
    %Weighted average expected option term (in years)
    
    
    5.0
 Note I  Stockholders Equity Effective January 1, 2004, the Company sold 125 shares of its Series A
Cumulative Redeemable Preferred Stock directly to 125 investors at a per share
price of $1,000.00. The transaction resulted in net proceeds to the company of
$95,000. On February 4, 2004, the Company completed a private placement of 1,000,000
shares of its common stock to one institutional investor. The offering price
was $10.00 per share, which provided approximate net proceeds to the Company of
$9.4 million. On March 23, 2004 the Company issued 113,000 restricted stock awards at $10.00
per share to certain officers and employees, which are being amortized over
their estimated service period. Compensation cost recognized for the restricted
stock awards was $275,000 for the period ended March 31, 2004. 13




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Origen Financial, Inc. Notes to Consolidated Financial Statements (Unaudited) Note J  Recent Accounting Pronouncements On March 31, 2004 the Financial Accounting Standards Board (FASB) issued a
proposed statement, Share-Based Payment - an Amendment of FASB Statement No.
123 and APB No. 95, that addresses the accounting for share-based payment
transactions in which an enterprise receives employee services in exchange for
(a) equity instruments of the enterprise or (b) liabilities that are based on
the fair value of the enterprises equity instrument or that may be settled by
the issuance of such equity instruments. Under the FASBs proposal, all forms
of share-based payments to employees, including employee stock options, would
be treated the same as other forms of compensation by recognizing the related
cost in the income statement. The expense of the award would generally be
measured at fair value at the grant date. Current accounting guidance
requires that the expense relating to so-called fixed plan employee stock
options only be disclosed in the footnotes to financial statements. The
proposed Statement would eliminate the ability to account for share-based
compensation transactions using APB Opinion No. 25, Accounting for Stock
Issued to Employees. Note K  Subsequent Events In May 2004 the Company completed an initial public offering of its common
stock. In June 2004 the underwriters of the initial public offering purchased
an additional 625,900 shares of the Companys common stock pursuant to an over
allotment-option. Net proceeds of this offering were $62.9 million after
discount and expenses, which were used to pay down the aggregate
balances of the notes outstanding under the Companys loan funding facility
with Citigroup and fund new loan originations. The Company entered into a repurchase agreement with Citigroup for the purpose
of financing the purchase of its investment in a $31.5 million asset backed
security. There is no liquid market for this security which makes valuation
difficult. Citigroup periodically performs an in-house valuation of the
security based on general market conditions and not conditions specific to the
security. Since the acquisition of the security, Citigroup has required an
adjustment in the funded amount of the repurchase facility of approximately
$4.1 million. This has not impacted the Companys ability or intent to hold the
security until maturity. Nor has it altered the Companys view of the value of
the bonds, since the projected cash flows from the underlying collateral are
more than adequate to service the bond debt. 14




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##### Table of Contents



Item 2. Managements Discussion and Analysis of Financial Condition
and Results of Operations This Form 10-Q includes certain forward looking statements. The words
will, may, designed to, believes, should, anticipates, plans,
expects, intends, and estimates, and similar expressions, identify these
forward-looking statements. Although we believe that the expectations
reflected in such forward-looking statements are based on reasonable
assumptions, these expectations may not be correct. Important factors that
could cause our actual results to differ materially from the forward-looking
statements we make in this document include the following:  
    
    the performance of our manufactured home loans;
    
    our ability to borrow at favorable rates and terms;
    
    the supply of manufactured home 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. All forward-looking statements included in this document are based on
information available to us on the date of this document. We do not intend to
update or revise any forward-looking statements that we make in this document
or other documents, reports, filings or press releases, whether as a result of
new information, future events or otherwise. The following discussion and analysis of the consolidated financial
condition and results of operations should be read in conjunction with the
consolidated financial statements and the notes thereto. Capitalized terms are
used as defined elsewhere in this Quarterly Report on Form 10-Q. Overview On October 8, 2003, we began operations upon the completion of a private
placement of $150 million of our common stock to certain institutional and
accredited investors. On February 4, 2004, we completed another private
placement of $10 million of our common stock to one institutional investor. In
connection with and as a condition to the October 2003 private placement, we
acquired all of the equity interests of Origen Financial L.L.C. We also took
steps to qualify Origen Financial, Inc. as a REIT. Currently, most of our
operations are conducted through Origen Financial L.L.C., which is our
wholly-owned subsidiary. We conduct the rest of our business operations through
our other wholly-owned subsidiaries, including taxable REIT subsidiaries, to
take advantage of certain business opportunities and ensure that we comply with
the federal income tax rules applicable to REITs. 15




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##### Table of Contents



Item 2. Managements Discussion and Analysis of Financial Condition
and Results of Operations The results of operations for the three months ended March 31, 2003 used
for comparison purposes in this discussion and analysis of financial condition
and results of operations are those of our predecessor company Origen
Financial, L.L.C. Origen Financial L.L.C. relied heavily on high cost
short-term borrowings to fund day-to-day operations due to a lack of
significant permanent capital. This lack of capital combined with losses
incurred from underperforming loans originated prior to year 2002 (referred to
as legacy loans), resulted in significant net operating losses prior to the
commencement of our operations. Critical Accounting Policies Our discussion and analysis of our financial condition and results of
operations are based upon our financial statements, which have been prepared in
accordance with accounting principles generally accepted in the United States
of America. The preparation of these financial statements requires us to make
estimates and judgments that affect the reported amounts of assets,
liabilities, revenues and expenses, and the related disclosures. On an on-going
basis, we evaluate these estimates, including those related to reserve for
credit losses, recourse liabilities, servicing rights and retained interests in
loans sold and securitized. Estimates are based on historical experience,
information received from third parties and on various other assumptions that
are believed to be reasonable under the circumstances, which form the basis for
making judgments about the carrying values of assets and liabilities that are
not readily apparent from other sources. Actual results may differ from these
estimates under different assumptions or conditions. 16




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##### Table of Contents



Item 2. Managements Discussion and Analysis of Financial Condition
and Results of Operations Transfers of Financial Assets:We engage in securitizations and whole
loan sales of our manufactured home loan receivables. Securitizations may take
the form of a loan sale or a financing. We structured all loan securitizations
occurring before 2003 as loan sales and all loan securitizations in 2003 and
2004 as financings for accounting purposes. In the future, we intend to
structure and account for our securitizations as financings. When a loan
securitization is structured as a financing, the financed asset remains on our
books along with the recorded liability that evidences the financing. Income
from both the loan interest spread and the servicing fees received on the
securitized loans are recorded into income as earned. An appropriate allowance
for credit losses is maintained on the loans. When a loan securitization is
structured as a loan sale, any gains and losses are recognized in the
consolidated statements of operations when control of the transferred financial
asset is relinquished by the seller. In accordance with Statement of Financial
Accounting Standards No. 140 Accounting For Transfers and Servicing of
Financial Assets and Extinguishments of Liabilitiescertain assets and income
are recorded based upon the difference between all principal and interest
received from the loans sold and the following factors (i) all principal and
interest required to be passed through to the asset-backed bond investors, (ii)
all excess contractual servicing fees, (iii) other recurring fees and (iv) an
estimate of losses on loans. At the time of the sale these amounts are
estimated based upon a declining principal balance of the underlying loans,
adjusted by an estimated prepayment and loss rate, and such amounts are
capitalized using a discount rate that market participants would use for
similar financial instruments. These capitalized assets are recorded as
retained interests in loans sold and securitized and capitalized servicing
rights. We assess the carrying value of any retained interests for impairment
on a monthly basis. Any subsequent changes in fair value of the retained
interests are recognized in the consolidated statements of operations. The use
of different pricing models or assumptions could produce different financial
results. There can be no assurance that our estimates used to determine the
value of retained interests and the servicing asset valuations will remain
appropriate for the life of the securitization. Allowance for Credit Losses:Our loan portfolio is comprised of
manufactured home loans with an average loan balance of less than $50,000. The
allowance for credit losses is determined at the portfolio level and computed
by applying loss rate factors to the loan portfolio on a stratified basis using
current portfolio performance and delinquency levels (0-30 days, 31-60 days,
61-90 days and more than 90 days delinquent). Our loss rate factors are based
on historical loan loss experience and are adjusted for economic conditions and
other trends affecting borrowers ability to repay and estimated collateral
value. The allowance for loan losses represents an unallocated allowance; there
are no elements of the allowance allocated to specific individual loans or to
impaired loans. 17




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##### Table of Contents



Item 2. Managements Discussion and Analysis of Financial Condition
and Results of Operations Liability for Loans Sold With Recourse:We periodically sell manufactured
home loans on a whole-loan basis. At the time of such loan sales, we recognize
recourse liabilities pursuant to our future obligations, if any, to the
applicable loan purchasers under the provisions of the respective sale
agreements. Under existing recourse provisions, we are required to repurchase
any loan contract that goes into default, as defined in the respective loan
agreement, for the life of each loan sold, at an amount equal to the
outstanding principal balance and accrued interest, and refund any purchase
premiums. The loan purchasers have no recourse to our other assets for failure
of debtors to pay when due. The loan pools subject to recourse provisions are comprised of
manufactured home loans with an average loan balance of less than $50,000. The
estimated recourse liability is calculated based on historical default rates
and loss experience for pools of similar loans we originate and service. These
loss rates are applied to each pool of loans subject to recourse provisions and
the resulting estimated recourse liability represents the present value of the
expected obligations under those recourse provisions. The loss rates are
adjusted for economic conditions, other trends affecting borrowers ability to
repay and estimated collateral value. The recourse liability is calculated at a
portfolio level and there are no elements of the estimated recourse liability
allocated to specific loans. Derivative Financial Instruments:We have periodically used derivative
instruments, including forward sales of U.S. Treasury securities, U.S. Treasury
rate locks and forward interest rate swaps to mitigate interest rate risk
related to our loans receivable and anticipated sales or securitizations. We
follow the provisions of Statement of Financial Accounting Standards No.
133,Accounting for Derivative Instruments and Hedging Activities(as amended
by Statement of Financial Accounting Standards No. 149, SFAS 133). Under SFAS
133, all derivative instruments are recorded on the balance sheet at fair value
and changes in fair value are recorded in current earnings or other
comprehensive income, depending on whether a derivative instrument qualifies
for hedge accounting and, if so, whether the hedge transaction represents a
fair value or cash flow hedge. Hedges are measured for effectiveness both at inception and on an ongoing
basis, and hedge accounting is terminated if a derivative instrument ceases to
be effective as a hedge or its designation as a hedge is terminated. In the
event of termination of a hedge, any gains or losses during the period that a
derivative instrument qualified as a hedge are recognized as a component of the
hedged item and subsequent gains or losses are recognized in earnings. Derivative financial instruments that do not qualify for hedge accounting
are carried at fair value and changes in fair value are recognized currently in
earnings. 18




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##### Table of Contents



Item 2. Managements Discussion and Analysis of Financial Condition
and Results of Operations Stock Options:In connection with our formation, we adopted a stock
option plan. We have elected to measure compensation cost using the intrinsic
value method in accordance with APB Opinion No. 25 Accounting for Stock Issued
to Employees. Goodwill Impairment:The provisions of Statement of Financial Accounting
Standards No. 142, Goodwill and Other Intangible Assets,require that
recorded goodwill be tested for impairment on an annual basis. The initial and
on-going estimate of our fair value is based on our assumptions and
projections. Once determined, the amount is compared to our net book value to
determine if a write-down in the recorded value of the goodwill is necessary. Results of Operations Comparison of the three months ended March 31, 2004 and 2003. Interest Income Interest income for the three months ended March 31, 2004 increased 68.5%
to approximately $9.1 million compared to approximately $5.4 million for the
three months ended March 31, 2003. This increase resulted primarily from an
increase of $194.5 million or 101.4% in average loan receivables over the two
corresponding periods. The increase in interest income was lower than the
increase in average loans receivable due primarily to a positive change in the
credit quality of the loan portfolio for the period ended March 31, 2004
compared to the period ended March 31, 2003. Generally, higher credit quality
loans will carry a lower interest rate. The weighted average interest rate on
the loan portfolio for the period ended March 31, 2004 was 9.29% compared to
10.29% for the period ended March 31, 2003. Interest expense for the three months ended March 31, 2004 was
approximately $3.0 million compared to $2.7 million for the three months ended
March 31, 2003, representing an increase of $0.3 million or 11.1%. The
majority of our interest expense relates to interest on our loan funding
facilities. Average debt outstanding on our loan funding facilities was
approximately $384.9 million for the period ended March 31, 2004 compared to
$209.6 million for the period ended March 31, 2003, resulting in an increase of
$175.3 million or 83.6%. The increase in average outstanding debt was
partially offset by a decrease in average interest rate on the debt which was
4.17% for the period ended March 31, 2004 compared to 5.2% for the period ended
March 31, 2003. 19




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##### Table of Contents



Item 2. Managements Discussion and Analysis of Financial Condition
and Results of Operations The following table presents information relative to the average balances
and interest rates for the three months ended March 31 (dollars in thousands): 2004
    
    2003Average
    
    
    
    
    
    Yield/
    
    Average
    
    
    
    
    
    Yield/Balance
    
    Interest
    
    Rate
    
    Balance
    
    Interest
    
    RateInterest earning assets:Manufactured housing loans
    
    $
    386,427
    
    
    $
    8,974
    
    
    
    9.29
    %
    
    $
    191,888
    
    
    $
    4,934
    
    
    
    10.29
    %Investment securities
    
    
    31,363
    
    
    
    98
    
    
    
    6.88
    %
    
    
    
    
    
    
    
    
    
    
    Other
    
    
    11,998
    
    
    
    29
    
    
    
    0.88
    %
    
    
    2,394
    
    
    
    4
    
    
    
    0.73
    %Total
    
    $
    429,788
    
    
    $
    9,101
    
    
    
    8.88
    %
    
    $
    194,282
    
    
    $
    4,938
    
    
    
    10.17
    %Interest bearing liabilities:Loan funding facilities
    
    $
    384,929
    
    
    $
    2,983
    
    
    
    4.17
    %
    
    $
    209,640
    
    
    $
    2,673
    
    
    
    5.20
    %Repurchase agreement -
investment securities
    
    
    23,520
    
    
    
    19
    
    
    
    1.84
    %
    
    
    
    
    
    
    
    
    
    
    Notes payable - servicing
advances
    
    
    2,602
    
    
    
    17
    
    
    
    5.05
    %
    
    
    4,191
    
    
    
    11
    
    
    
    2.13
    %Total
    
    $
    411,051
    
    
    $
    3,019
    
    
    
    4.04
    %
    
    $
    213,831
    
    
    $
    2,684
    
    
    
    5.14
    %Net interest income and
interest rate spread
    
    
    
    
    
    $
    6,082
    
    
    
    4.84
    %
    
    
    
    
    
    $
    2,254
    
    
    
    5.03
    %Net yield on average interest
earning assets
    
    
    
    
    
    
    
    
    
    
    5.66
    %
    
    
    
    
    
    
    
    
    
    
    4.64
    %
 20




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##### Table of Contents



Item 2. Managements Discussion and Analysis of Financial Condition
and Results of Operations The following table sets forth the changes in net interest income
attributable to changes in volume (change in average portfolio volume
multiplied by prior period average rate) and changes in rates (change in
weighted average interest rate multiplied by prior period average portfolio
balance) for the three months ended March 31, 2004 compared to the three months
ended March 31, 2003 (in thousands): Volume
    
    Rate
    
    TotalInterest earning assets:Manufactured housing loans
    
    $
    4,045
    
    
    $
    (5
    )
    
    $
    4,040Investment securities
    
    
    98
    
    
    
    
    
    
    
    98Other
    
    
    25
    
    
    
    
    
    
    
    25Total interest income
    
    $
    4,168
    
    
    $
    (5
    )
    
    $
    4,163Interest bearing liabilities:Loan funding facilities
    
    $
    316
    
    
    $
    (6
    )
    
    $
    310Repurchase agreement -
investment securities
    
    
    19
    
    
    
    
    
    
    
    19Notes payable - servicing
advances
    
    
    6
    
    
    
    
    
    
    
    6Total interest expense
    
    $
    341
    
    
    $
    (6
    )
    
    $
    335Increase in net interest income
    
    
    
    
    
    
    
    
    
    $
    3,828
 Non-interest Income Non-interest income is primarily made up of loan servicing related revenue
including loan servicing fees, late charges and commissions on force placed
insurance. Such revenue for the three months ended March 31, 2004 totaled $2.9
million compared to $2.1 million for the three months ended March 31, 2003, an
increase of 38.1%. Loan servicing fees totaled $2.4 million and $1.6 million
for the three months ended March 31, 2004 and 2003, respectively. Typically,
we receive servicing fees of 1.00% on loans we place in securitized
transactions, however, during the three months ended March 31, 2004 we financed
our loans on securitization facilities, the terms of which specified a
servicing fee of 1.25%, resulting in higher servicing income on a significant
portion of our serviced loans. The average serviced loan portfolio on which
servicing fees are collected increased approximately $197.6 million or 18.4%
for the quarter ended March 31, 2004 compared to the quarter ended March 31,
2003. The weighted average service fee rate increased approximately .15% for
the quarter ended March 31, 2004 compared to the quarter ended March 31, 2003. 21




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##### Table of Contents



Item 2. Managements Discussion and Analysis of Financial Condition
and Results of Operations Provision for Losses We maintain an allowance for credit losses to cover probable losses that
can be reasonably estimated for loan receivables held on our balance sheet.
The level of the allowance is based principally on the outstanding balance of
the contracts held on our balance sheet and historical loss trends. We also
maintain a recourse liability to cover probable losses that can be reasonably
estimated on loans that we have sold in a true sale transaction but the terms
of the sale included recourse provisions. The provision for credit losses and recourse reserves was $1.9 million for
the three months ended March 31, 2004 compared to $0.6 million for the three
months ended March 31, 2003. The increase resulted from both an increase in
outstanding principal due to new loan originations and the amount of loans
charged off. Total net chargeoffs for the three months ended March 31, 2004
were $3.5 million, with $1.6 million being charged to the allowance for credit
losses and $1.9 million being charged to the recourse liability, compared to
total net chargeoffs of $1.8 million, with $0.6 million being charged to the
allowance for credit losses and $1.2 million being charged to the recourse
liability for the three months ended March 31, 2003. As a percentage of
average outstanding principal balance (including $54.4 million and $69.9
million in average principal balance of loans sold with recourse for the
quarters ended March 31, 2004 and 2003, respectively) total net chargeoffs on
an annualized basis were 3.2% for the quarter ended March 31, 2004 compared to
2.8% for the quarter ended March 31, 2003. We expect net chargeoffs as a
percentage of average outstanding principal balance to decrease in the future
due to the higher credit quality of loans originated in years 2002 through 2004
versus that of loans originated in years 2000 and 2001 and also because the
life of the loans we have sold with recourse extend beyond the peak loss
periods in a normal loan life cycle. Non-interest
Expenses Personnel expenses increased approximately $0.2 million or 4.8% to $4.4
million for the three months ended March 31, 2004 compared to $4.2 million for
the three months ended March 31, 2003. The increase is primarily related to an
increase in the average number of full time employees, which was 258 full time
employees for the quarter ended March 31, 2004 compared to 240 full time
employees for the quarter ended March 31, 2003. The increase in the number of
full time employees is partially offset by an approximate $0.1 million decrease
in the use of temporary employees for the comparable quarters. Loan origination and servicing expenses increased 12.8% to $352,000 for
the quarter ended March 31, 2004 compared to $312,000 for the quarter ended
March 31, 2003. The increase is a result of increased originations and an
increase in outstanding loan balance of the servicing portfolio. 22




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##### Table of Contents



Item 2. Managements Discussion and Analysis of Financial Condition
and Results of Operations Other operating expenses, which consist of occupancy and equipment,
professional fees, travel and entertainment and miscellaneous expenses
decreased approximately $139,000 or 12.5% for the quarter ended March 31, 2004
compared to the quarter ended March 31, 2003. Occupancy and equipment expense was approximately $1.0 million for the
quarter ended March 31, 2004 compared to $1.2 million for the quarter ended
March 31, 2003, a decrease of 20%. The reduced expenses are primarily the
result of consolidating the functions performed in our Ohio office and by
relocating our corporate offices from Birmingham, Michigan to Southfield,
Michigan in April 2003. Professional fees were $97,000 for the quarter ended
March 31, 2004 compared to $207,000 for the quarter ended March 31, 2003, a
decrease of 53.1%. The primary reason for the decrease related to a reduction
in the use of outside professionals needed to ensure we were appropriately
licensed prior to our formation as a REIT. Travel and entertainment expenses
decreased approximately $157,000 or 37.3% to $264,000 for the quarter ended
March 31, 2004 compared to $421,000 for the quarter ended March 31, 2003. The
decrease is primarily related to cost cutting measures and consolidation of
certain marketing and sales activities implemented in 2003. The decreases in
occupancy and equipment, professional fees and travel and entertainment were
partially offset by an increase of approximately $213,000 in director and
officer liability insurance and director fees which were $222,000 for the
quarter ended March 31, 2004 compared to $9,000 for the quarter ended March 31,
2003. Such increases are a direct result of the additional costs incurred
related to our formation as a REIT in October 2003. Net Income Net income rose to $0.6 million for the three months ended March 31, 2004
compared to a net loss of $2.2 million for the three months ended March 31,
2003. The increase is the result of an increase of $3.7 million or 68.5%, in
interest income on loans, and an increase of $0.8 million, or 39.2%, in loan
servicing fees over the two periods. The increase in interest and service fee
income resulted primarily from a 101.4% increase in average loans receivable to
$386.4 million for the quarter ended March 31, 2004 compared to $191.9 million
for the quarter ended March 31, 2003. While interest expense has risen
slightly with the increased average outstanding debt, total non-interest
expenses have increased only 1.6% to $6.4 million for the quarter ended March
31, 2004 compared to $6.3 million for the quarter ended March 31, 2003. As a
percent of total revenues, non-interest operating expense decreased to 53.8%
for the quarter ended March 31, 2004 from 84.4% for the quarter ended March 31,
2003. As a percentage of average outstanding loan receivable balance,
non-interest operating expense decreased to 1.7% for the quarter ended March
31, 2004 from 3.3% for the quarter ended March 31, 2003. 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 Net loans receivable outstanding increased 12.1% to $413.0 million at
March 31, 2004 compared to $368.5 million at December 31, 2003. Loans
receivable are comprised of installment contracts and mortgages collateralized
by manufactured homes and in some instances real estate. New loan originations for the quarter ended March 31, 2004 increased 25.5%
to $45.6 million compared to $36.4 million for the quarter ended March 31,
2003. The increase was due primarily to increased market share resulting from
our focus on customer service and the use of technology to deliver our products
and services. New loan originations include the purchase of approximately $12.3 million in manufactured
home loans from an affiliate of Sun Communities, Inc.  At March 31, 2004, Sun Communities, Inc.
beneficially owned approximately 30% of our issued and outstanding common stock. The following table sets forth the average loan balance, weighted average
loan coupon and weighted average initial term of the loan receivable portfolio
(dollars in thousands): March 31,
    
    December 31,2004
    
    2003Principal balance loans receivable
    
    $
    423,004
    
    
    $
    380,174Number of loans receivable
    
    
    10,156
    
    
    
    9,154Average loan balance
    
    $
    42
    
    
    $
    42Weighted average loan coupon (a)
    
    
    10.15
    %
    
    
    10.23
    %Weighted average initial term
    
    22 years
    
    23 years
  (a)
    
    The weighted average loan coupon includes any imbedded
servicing fee rate resulting from securitization or sale of the
loan but accounted for as a financing. The manufactured home contracts are collateralized by manufactured homes that
were built between the years 1973 and 2004, with approximately 82.4% of the
manufactured homes built since 1999. Delinquency statistics for the manufactured home loan portfolio are as
follows (dollars in thousands): March 31, 2004
    
    December 31, 2003No. of
    
    Principal
    
    % of
    
    No. of
    
    Principal
    
    % ofDays delinquent
    
    Loans
    
    Balance
    
    Portfolio
    
    Loans
    
    Balance
    
    Portfolio31-60
    
    
    127
    
    
    $
    4,456
    
    
    
    1.1
    %
    
    
    193
    
    
    $
    7,068
    
    
    
    1.9
    %61-90
    
    
    53
    
    
    
    1,933
    
    
    
    0.5
    %
    
    
    83
    
    
    
    2,943
    
    
    
    0.8
    %Greater than 90
    
    
    157
    
    
    
    6,421
    
    
    
    1.5
    %
    
    
    158
    
    
    
    6,575
    
    
    
    1.7
    %
 We define non-performing loans as those loans that are 90 or more days
delinquent in contractual principal payments. For the quarter ended March 31,
2004 the average outstanding principal balance of non-performing loans was
approximately $6.7 million compared to $3.9 million for the quarter ended March
31, 2003. However, non-performing loans as a percentage of average loan
receivables was 1.74% for the quarter ended March 31, 2004 compared to 2.04%
for the quarter ended March 31, 2003. 24




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Item 2. Managements Discussion and Analysis of Financial Condition
and Results of Operations  The average principal balance of repossessed assets on our balance sheet
was $8.3 million, or 2.2% of the average loan receivable balance for the
quarter ended March 31, 2004 compared to $7.2 million, or 3.8% of average loan
receivable balance for the quarter ended March 31, 2003.The allowance for credit losses was $4.2 million at March 31, 2004
compared to $3.6 million at December 31, 2003. The increase in the allowance
for credit losses is primarily due to new loan originations. The allowance for
credit losses as a percentage of net loans receivable was 1.17% at March 31,
2004 compared to 1.18% at December 31, 2003. Net chargeoffs were $3.5 million
for the quarter ended March 31, 2004 compared to $1.8 million for the quarter
ended March 31, 2003. Based on the analysis we performed related to the
allowance for credit losses as described above under Critical Accounting
Policies, we believe that our allowance for credit losses is currently adequate
to cover probable losses in our loan portfolio that can be reasonably
estimated.Our asset quality statistics for the first quarter of 2004 reflect
improving conditions in the economy and the industry. They also reflect the
improving underwriting and origination practices we put into place in 2002.
Continued improvement in delinquency statistics should result in lower levels
of non-performing assets and net charge-offs. Lower levels of non-performing
assets and net chargeoffs should have a positive effect on earnings through
decreases in the provision for credit losses and servicing expenses as well as
increases in net interest income. Liquidity and Capital Resources We require capital to fund our loan originations, acquire manufactured
home loans originated by third parties and expand our loan servicing
operations. At March 31, 2004, we had approximately $12.6 million in available
cash and cash equivalents. As a REIT, we will be required to distribute at
least 90% of our taxable income to our stockholders on an annual basis.
Therefore, as a general matter, it is unlikely we will have any substantial
cash balances that could be used to meet our liquidity needs. Instead, these
needs must be met from cash provided from operations and external sources of
capital. Historically, we have satisfied our liquidity needs through cash
generated from operations, sales of our common and preferred stock, borrowings
on our credit facilities and loan sales and securitizations. Cash used in operating activities during the three months ended March 31,
2004, totaled $51.9 million versus $36.5 million for the three months ended
March 31, 2003. Cash used to originate loans increased 48.8%, or $19.5 million
for the quarter ended March 31, 2004 compared to the quarter ended March 31,
2003. Principal collections on loans held for sale totaled $11.4 million for
the quarter ended March 31, 2004 as compared to $5.3 million in the quarter
ended March 31, 2003, an increase of $6.1 million, or 115.1%. The increase in
collections is primarily related to the increase in the average outstanding
loan portfolio balance, which was $386.4 million for the quarter ended March
31, 2004 compared to $191.9 million for the quarter ended March 31, 2003. 25




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##### Table of Contents



Item 2. Managements Discussion and Analysis of Financial Condition
and Results of Operations Cash used in investing activities was $31.4 million in the three months
ended March 31, 2004 versus $0.6 million for the three months ended March 31,
2003. The primary reason for the increase in the use of cash was the purchase
of a $31.5 million asset backed security. The security is collateralized by
manufactured home loans and is classified as held-to-maturity. It has a
contractual maturity date of July 28, 2033 and has an effective yield of 6.88%. The primary sources of cash during the quarter ended March 31, 2004 were
approximately $78.5 million in net proceeds from notes payable used to finance
loans and approximately $9.6 million from the issuance of common stock. This
is compared to approximately $15.8 million in net proceeds from the issuance of
notes payable and repurchase agreements to finance loans and $20.0 million in
proceeds from minority interest investments for the quarter ended March 31,
2003. Access to the securitization market is very important to our business.
Numerous factors affect our ability to complete a successful securitization,
including factors beyond our control. These include general market interest
rate levels, the shape of the yield curve and spreads between rates on U.S.
Treasury obligations and securitized bonds, all of which affect investors
demand for securitized debt. When these factors are unfavorable our ability to
successfully complete securitization transactions is impeded and our liquidity
and capital resources are affected negatively. There can be no assurance that
current favorable conditions will continue or that unfavorable conditions will
not return. On February 11, 2004, we completed a securitized financing transaction for
approximately $240.0 million of loans, which was funded by issuing bonds in the
approximate amount of $200 million, at a duration weighted average interest
cost of 5.13%. We structured the transaction to issue classes of bonds with
different estimated maturity dates and average lives to better meet investor
demands. Approximately $176.7 million of the securitization proceeds were used
to reduce the aggregate balances of the notes outstanding under our short-term
securitization facility giving us renewed borrowing capacity to fund new loan
originations. The outstanding balance of the 2004-A Notes issued was
approximately $193.9 million at March 31, 2004. 26




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##### Table of Contents



Item 2. Managements Discussion and Analysis of Financial Condition
and Results of Operations We currently have a loan funding facility with Citigroup. Under the terms
of the agreement, originally entered into in March 2003 and revised in November
2003 to split the loans into two pools, one under a note due in April 2004 and
one under a note due in November 2004, we pledge loans as collateral and in
turn are advanced funds. On March 30, 2004 the terms of the agreement were
modified by segregating the pledged loans into three separate pools designated
2004-1A, 2004-1B and 2004-1C. The maximum advance amount on 2004-1A (for new
loan production) was set at $170.0 million, the fixed advance amount on 2004-1B
(for loans originated in 2003) was set at approximately $71.6 million and the
maximum amount on 2004-1C (for loans acquired from third parties) was set at
$150.0 million. The modification added a stratified advance rate for each pool
and reduced the stated interest rate on all three pools. Additionally, the
maturity date was fixed on 2004-1A at March 29, 2005, on 2004-1B at November
16, 2004 and on 2004-1C at March 28, 2006. At March 31, 2004 the outstanding
balance on the notes issued under the facility was approximately $134.4
million. On March 14, 2004 the Company entered into a repurchase agreement with
Citigroup Global Markets, Inc. for the purpose of financing the purchase of its
investment in a $31.5 million asset backed security. Under the terms of the
agreement the Company sells its interest in the security with an agreement to
repurchase the interest at a predetermined future date at the principal amount
sold plus an interest component. The security was sold at an amount equal to 75
% of the outstanding principal balance. At March 31, 2004 the repurchase
agreement had an outstanding principal balance of approximately $23.5 and an
annual interest rate equal to LIBOR plus a spread. The agreement has a current
maturity date of April 28, 2004. We currently have a revolving credit facility with Bank One. Under the
terms of the facility we can borrow up to $7 million for the purpose of funding
required principal and interest advances on manufactured home loans that are
serviced for outside investors. Borrowings under the facility are repaid upon
our collection of monthly payments made by borrowers. The outstanding balance
under the facility accrues interest at the banks prime rate. To secure the
loan, we have granted the bank a security interest in substantially all of our
assets excluding securitized loans. The facility terminates on December 31,
2004. At March 31, 2004 we had approximately $2.6 million outstanding on this
facility. In addition to borrowings under our credit facilities, we have fixed
contractual obligations under various lease agreements. Our contractual
obligations were comprised of the following as of March 31, 2004: Less than
    
    1 - 3
    
    4 - 5Total
    
    1 year
    
    years
    
    years
    
    ThereafterNotes payable  Citigroup(1)
    
    $
    134,404
    
    
    $
    71,206
    
    
    $
    63,198
    
    
    $
    
    
    
    $
    Notes payable  2004 A securitization (2)
    
    
    193,942
    
    
    
    1,961
    
    
    
    9,519
    
    
    
    7,741
    
    
    
    174,721Repurchase agreement (3)
    
    
    23,520
    
    
    
    23,520
    
    
    
    
    
    
    
    
    
    
    
    Notes payable  servicing advances (4)
    
    
    2,550
    
    
    
    2,550
    
    
    
    
    
    
    
    
    
    
    
    Operating leases
    
    
    2,959
    
    
    
    977
    
    
    
    1,801
    
    
    
    181
    
    
    
    Total Contractual Obligations
    
    $
    357,375
    
    
    $
    100,214
    
    
    $
    74,518
    
    
    $
    7,922
    
    
    $
    174,721
 27




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##### Table of Contents



Item 2. Managements Discussion and Analysis of Financial Condition
and Results of Operations (1) Origen Financial L.L.C. and Origen Securitization Company, LLC are
borrowers
under the short-term securitization facility with Citigroup.   (3) Origen Financial L.L.C. is the borrower under the Citigroup repurchase
agreement. (4) Origen Financial L.L.C. is the borrower under the Bank One line of
credit. In May 2004 we completed an initial public offering of our common stock.
In June 2004, the underwriters for the offering purchased additional shares
under their over allotment option. Aggregate net proceeds of this offering
were approximately $62.9 million after discount and expenses, which were used
primarily to pay down the aggregate balances of the notes outstanding under our
loan funding facility with Citigroup and fund new loan originations. The net
proceeds from this offering, cash generated from operations and borrowings
under our Citigroup facility will enable us to meet our liquidity needs for
approximately 12 months depending on market conditions which may affect loan
origination volume, loan purchase opportunities and the availability of
securitizations. If adverse market conditions require or if loan purchase
opportunities become available, we may seek additional capital through
additional sales of our common or preferred stock in the short term. Our long-term liquidity and capital requirements consist primarily of
funds necessary to originate and hold manufactured home loans, acquire and hold
manufactured home loans originated by third parties and expand our loan
servicing operations. We expect to meet our long-term liquidity requirements
through cash generated from operations, but we will require external sources of
capital, including sales of shares of our common and preferred stock and
third-party borrowings. We intend to continue to access the asset-backed
securities market for the long-term financing of our loans in order to match
the interest rate risk between our loans and the related long-term funding
source. Our ability to meet our long-term liquidity needs depends on numerous
factors, many of which are outside of our control. These factors include
general market interest rate levels, the shape of the yield curve and spreads
between rates on U.S. Treasury obligations and securitized bonds, all of which
affect investors demand for securitized debt. 28




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##### Table of Contents



Item 2. Managements Discussion and Analysis of Financial Condition
and Results of Operations The risks associated with the manufactured housing business become more
acute in any economic slowdown or recession. Periods of economic slowdown or
recession may be accompanied by decreased demand for consumer credit and
declining asset values. In the manufactured housing business, any material
decline in collateral values increases the loan-to-value ratios of loans
previously made, thereby weakening collateral coverage and increasing the size
of losses in the event of default. Delinquencies, repossessions, foreclosures
and losses generally increase during economic slowdowns or recessions. For our
finance customers, loss of employment, increases in cost-of-living or other
adverse economic conditions would impair their ability to meet their payment
obligations. Higher industry inventory levels of repossessed manufactured homes
may affect recovery rates and result in future impairment charges and provision
for losses. In addition, in an economic slowdown or recession, servicing and
litigation costs generally increase. Any sustained period of increased
delinquencies, repossessions, foreclosures, losses or increased costs would
adversely affect our financial condition and results of operations. 29




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##### Table of Contents



Item 3. Quantitative and Qualitative Disclosures About Market Risk Market risk is the risk of loss arising from adverse changes in market
prices and interest rates. Our market risk arises from interest rate risk
inherent in our financial instruments. We are not currently subject to foreign
currency exchange rate risk or commodity price risk. Our variable rate debt totaled $160.5 million and $154.2 million at March
31, 2004 and March 31, 2003, respectively, under which we paid interest at
various LIBOR rates plus a spread. If LIBOR increased or decreased by 1.0%
during the three months ended March 31, 2004 and 2003, we believe our interest
expense would have increased or decreased by approximately $53,500 and $381,800
based on the $213.4 million and $152.7 million average balance outstanding
under our variable rate debt facilities for the three months ended March 31,
2004 and March 31, 2003, respectively. The small increase or decrease in
interest expense related to an increase or decrease in LIBOR for the three
months ended March 31, 2004 is due to the fact that approximately $187.7
million of our average variable rate debt outstanding for the period was hedged
through the use of interest rate swap agreements thus minimizing the effect of
changes in the benchmark (LIBOR) rate. We had no variable rate interest
earning assets outstanding during the three months ended March 31, 2004 or
2003. 30




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##### Table of Contents



Item 3. Quantitative and Qualitative Disclosures About Market Risk The following table shows the contractual maturity dates of our assets and
liabilities at March 31, 2004. For each maturity category in the table the
difference between interest-earning assets and interest-bearing liabilities
reflects an imbalance between repricing opportunities for the two sides of the
balance sheet. The consequences of a negative cumulative gap at the end of one
year suggests that, if interest rates were to rise, liability costs would
increase more quickly than asset yields, placing negative pressure on earnings. Maturity0 to 3
    
    4 to 12
    
    1 to 5
    
    Over 5Months
    
    Months
    
    Years
    
    Years
    
    TotalAssetsCash and equivalents
    
    $
    12,586
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    12,586Restricted cash
    
    
    6,539
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,539Loans receivable, net of allowance for loss
    
    
    1,358
    
    
    
    4,285
    
    
    
    38,597
    
    
    
    368,778
    
    
    
    413,018Investments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    31,543
    
    
    
    31,543Furniture, fixtures and equipment, net
    
    
    187
    
    
    
    584
    
    
    
    1,566
    
    
    
    
    
    
    
    2,337Goodwill
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    32,277
    
    
    
    32,277Other assets
    
    
    11,508
    
    
    
    7,084
    
    
    
    7,578
    
    
    
    2,016
    
    
    
    28,186Total assets
    
    $
    32,178
    
    
    $
    11,953
    
    
    $
    47,741
    
    
    $
    434,614
    
    
    $
    526,486Liabilities and Stockholders EquityWarehouse financing
    
    $
    23,962
    
    
    $
    97,170
    
    
    $
    36,792
    
    
    $
    
    
    
    $
    157,924Securitization financing
    
    
    638
    
    
    
    2,012
    
    
    
    18,124
    
    
    
    173,168
    
    
    
    193,942Notes
payable - servicing advances
    
    
    2,550
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,550Recourse liability
    
    
    725
    
    
    
    1,632
    
    
    
    3,269
    
    
    
    1,167
    
    
    
    6,793Other liabilities
    
    
    11,638
    
    
    
    611
    
    
    
    
    
    
    
    500
    
    
    
    12,749Total liabilities
    
    
    39,513
    
    
    
    101,425
    
    
    
    58,185
    
    
    
    174,835
    
    
    
    373,958Preferred stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    125
    
    
    
    125Common stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    165
    
    
    
    165Paid-in-capital
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    155,796
    
    
    
    155,796Accumulated other comprehensive loss
    
    
    (5
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (5
    )Unearned stock compensation
    
    
    (428
    )
    
    
    (1,021
    )
    
    
    (2,590
    )
    
    
    
    
    
    
    (4,039
    )Retained Earnings
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    486
    
    
    
    486Total stockholders equity
    
    
    (433
    )
    
    
    (1,021
    )
    
    
    (2,590
    )
    
    
    156,572
    
    
    
    152,528Total liabilities and stockholders equity
    
    $
    39,080
    
    
    $
    100,404
    
    
    $
    55,595
    
    
    $
    331,407
    
    
    $
    526,486Reprice difference
    
    $
    (6,902
    )
    
    $
    (88,451
    )
    
    $
    (7,854
    )
    
    $
    103,207Cumulative gap
    
    $
    (6,902
    )
    
    $
    (95,353
    )
    
    $
    (103,207
    )
    
    $
    Percent of total assets
    
    
    (21.45
    %)
    
    
    (797.73
    %)
    
    
    (216.18
    %)
    
    
    
 We believe the negative effect of a rise in interest rates is reduced by
the anticipated securitization of our loans receivable which fixes our cost of
funds associated with the loans over the lives of such loans. 31




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##### Table of Contents



Item 3. Quantitative and Qualitative Disclosures About Market Risk In conjunction with the loan funding facility with Citigroup, we entered
into six interest rate swap agreements in an effort to manage interest rate
risk on our floating rate notes payable. The interest rate swaps expired on
April 12, 2004. The interest rate swaps were structured to be hedges against
changes in the benchmark interest rate (LIBOR) of the floating rate notes. We
designated the swaps as hedges for accounting purposes. The hedges were highly
effective and had a minimal impact on the results of operations. In accordance with SFAS 133, which requires all derivative instruments to
be carried at fair value on the balance sheet, we recorded the swaps as a
liability of approximately $4,000 as of March 31, 2004. Mark to market changes
in the value of the swaps are included in other comprehensive income. The following table shows our financial instruments that are sensitive to
changes in interest rates, categorized by expected maturity, and the
instruments fair values at March 31, 2004. Contractual MaturityTotal2004
    
    2005
    
    2006
    
    2007
    
    2008
    
    Thereafter
    
    Fair Value(Dollars in thousands)Interest sensitive assets:Loans receivable
    
    $
    4,178
    
    
    $
    6,087
    
    
    $
    6,734
    
    
    $
    7,450
    
    
    $
    8,243
    
    
    $
    380,326
    
    
    $
    413,018Average interest rate
    
    
    10.15
    %
    
    
    10.15
    %
    
    
    10.15
    %
    
    
    10.15
    %
    
    
    10.15
    %
    
    
    10.15
    %
    
    
    10.15
    %Interest bearing deposits
    
    
    11,998
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    11,998Average interest rates
    
    
    0.88
    %
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    0.88
    %Loan sale proceeds receivable
    
    
    328
    
    
    
    370
    
    
    
    311
    
    
    
    266
    
    
    
    229
    
    
    
    1,259
    
    
    
    2,763Average interest rate
    
    
    1.50
    %
    
    
    1.50
    %
    
    
    1.50
    %
    
    
    1.50
    %
    
    
    1.50
    %
    
    
    1.50
    %
    
    
    1.50
    %Investments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    31,543
    
    
    
    31,543Average interest rate
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6.88
    %
    
    
    6.88
    %Residual interests
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    749
    
    
    
    749Average interest rate
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    15.00
    %
    
    
    15.00
    %Total interest sensitive assets
    
    $
    16,504
    
    
    $
    6,457
    
    
    $
    7,045
    
    
    $
    7,716
    
    
    $
    8,472
    
    
    $
    413,877
    
    
    $
    460,071Interest sensitive liabilities:Borrowings:Warehouse financing
    
    
    94,726
    
    
    
    26,824
    
    
    
    36,374
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    157,924Average interest rate
    
    
    1.89
    %
    
    
    2.29
    %
    
    
    2.34
    %
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    10.42
    %Securitization financing
    
    
    1,962
    
    
    
    2,858
    
    
    
    3,162
    
    
    
    3,498
    
    
    
    3,871
    
    
    
    178,591
    
    
    
    193,942Average interest rate
    
    
    4.00
    %
    
    
    4.00
    %
    
    
    4.00
    %
    
    
    4.00
    %
    
    
    4.00
    %
    
    
    4.00
    %
    
    
    4.00
    %Notes
payable - servicing
advances
    
    
    2,550
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,550Average interest rate
    
    
    5.05
    %
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5.05
    %Recourse liability
    
    
    1,717
    
    
    
    1,637
    
    
    
    959
    
    
    
    575
    
    
    
    380
    
    
    
    1,525
    
    
    
    6,793Average interest rate
    
    
    10.42
    %
    
    
    10.42
    %
    
    
    10.42
    %
    
    
    10.42
    %
    
    
    10.42
    %
    
    
    10.42
    %
    
    
    10.42
    %Total interest sensitive liabilities
    
    $
    100,955
    
    
    $
    31,319
    
    
    $
    40,495
    
    
    $
    4,073
    
    
    $
    4,251
    
    
    $
    180,116
    
    
    $
    361,209
 32




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##### Table of Contents



Item 4. Controls and Procedures  (a)
    
    Under the supervision and with the participation of the
Companys management, including the Chief Executive Officer, Ronald
A. Klein, and Chief Financial Officer, W. Anderson Geater, Jr., the
Company evaluated the effectiveness of the design and operation of
the Companys disclosure controls and procedures as of the end of
the period covered by this quarterly report, pursuant to Rule 13a-15
of the Securities Exchange Act of 1934 (the Exchange Act). Based
upon that evaluation, the Companys Chief Executive Officer and
Chief Financial Officer concluded that the Companys disclosure
controls and procedures were effective to ensure that information
the Company is required to disclose in its filings with the SEC
under the Exchange Act is recorded, processed, summarized and
reported within the time periods specified in the SECs rules and
forms, and to ensure that information required to be disclosed by
the Company in the reports that it files under the Exchange Act is
accumulated and communicated to the Companys management, including
its principal executive officer and principal financial officer, as
appropriate to allow timely decisions regarding required disclosures(b)
    
    There have been no significant changes in the Companys
internal control over financial reporting during the quarterly
period ended March 31, 2004, that have materially affected, or are
reasonably likely to materially affect, the Companys internal
control over financial reporting. 33




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##### Table of Contents



PART II            OTHER INFORMATION 
 ITEM 2.  Changes in Securities and Use of Proceeds  (a)
    
    On January 1, 2004, we sold 125 shares of our Series A
Cumulative Redeemable Preferred Stock directly to 125 accredited
investors at a per share price of $1,000.00 pursuant to an exemption
from registration set forth in Section 4(2) of the Securities Act
and Rule 506 of Regulation D promulgated thereunder. The aggregate
offering price was $125,000. We paid REIT Funding, LLC a placement
fee of $25,000 in connection with the offering.On February 4, 2004, we sold 1,000,000 shares of common stock
directly to one institutional investor at a per share price of
$10.00, pursuant to an exemption from registration set forth in
Section 4(2) of the Securities Act and Rule 506 of Regulation D
promulgated thereunder. The aggregate offering price was $10,000,000.
We paid an advisory fee of $0.575 per share to Lehman Brothers with
respect to these shares.(b)
    
    In May 2004, we completed an initial public offering of
8,000,000 shares common stock, $0.01 par value at an offering price
of $8.00 per share. Lehman Brothers Inc. was the managing
underwriter of the offering, and Credit Suisse First Boston LLC and
Flagstone Securities, LLC were co-managers of the offering. In
June 2004, the underwriters purchased an additional 625,900 shares
of common stock at the initial offering price of $8.00 per share
pursuant to their over-allotment option. Our registration statement
was declared effective by the SEC on May 5, 2004 (Registration No.
333-112516). We received aggregate gross offering proceeds of $69.0
million from these transactions and paid aggregate underwriting
commissions of $4.8 million. Aggregate other offering costs paid
totaled $1.3 million. Net offering proceeds after deducting
underwriting commissions and other offering costs was $62.9 million.
We used approximately $52.0 million of the net proceeds of this
offering to repay a portion of the short-term borrowings incurred
under our Citigroup financing arrangement. We have used the
remainder of the net offering proceeds to fund manufactured home
loans in the ordinary course of our business. 
 ITEM 6. Exhibits and Reports on Form 8-K (a) Exhibits Exhibit No.
    
    Description31.1
    
    Certification of Chief Executive Officer Required by Rule
13a-14(a) of the Securities Exchange Act of 1934, as amended.31.2
    
    Certification of Chief Financial Officer Required by Rule
13a-14(a) of the Securities Exchange Act of 1934, as amended.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.
 34




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##### Table of Contents



SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized. Dated:  June 18, 2004 ORIGEN FINANCIAL, INC.BY:
    
    /s/ W. Anderson Geater Jr.W. Anderson Geater Jr., ChiefFinancial Officer and Secretary(Duly authorized officer and principalfinancial officer)
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##### Table of Contents



ORIGEN FINANCIAL, INC. 
 EXHIBIT INDEX Exhibit No.
    

Description31.1
    
    Certification of Chief Executive Officer Required by Rule
13a-14(a) of the Securities Exchange Act of 1934, as amended.31.2
    
    Certification of Chief Financial Officer Required by Rule
13a-14(a) of the Securities Exchange Act of 1934, as amended.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.
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