Filed Pursuant to Rule 424(b)(3)
Registration No. 333-112520

Prospectus Supplement No. 6
(to Prospectus dated May 26, 2005)

This Prospectus Supplement No. 6 supplements and amends the Prospectus dated May 26, 2005 (the “Prospectus”) relating to the sale from time to time of up to 10,575,000 shares of our common stock by certain selling stockholders.

On August 9, 2006, we filed with the Securities and Exchange Commission the attached Quarterly Report on Form 10-Q and the attached Current Report on Form 8-K. The attached information supplements and supersedes, in part, the information contained in the Prospectus.

This Prospectus Supplement No. 6 should be read in conjunction with, and delivered with, the Prospectus and is qualified by reference to the Prospectus except to the extent that the information in this Prospectus Supplement No. 6 supersedes the information contained in the Prospectus.

Our common stock is listed on the Nasdaq National Market under the symbol “ORGN.”

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if the Prospectus or this Prospectus Supplement No. 6 is truthful or complete. Any representation to the contrary is a criminal offense.

The date of this Prospectus Supplement No. 6 is August 9, 2006.

 

 

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934

Date of Report (Date of earliest event reported) August 7, 2006

Origen Financial, Inc.

(Exact name of registrant as specified in its charter)

DELAWARE		000-50721		20-0145649
State of Incorporation		(Commission File Number)		(I.R.S. Employer
				Identification No.)
27777 Franklin Road, Suite 1700, Southfield, Michigan				48034
(Address of Principal Executive Offices)				(Zip Code)

Registrant’s telephone number, including area code: (248) 746-7000
(Former name or former address, if changed since last report)

     Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

o  Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o  Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o  Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d2(b))

o  Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e4(c))

 

 

ITEM 2.02 RESULTS OF OPERATIONS AND FINANCIAL CONDITION

     On August 7, 2006, Origen Financial, Inc. issued a press release reporting earnings and other financial results for the fiscal quarter ended June 30, 2006. A copy of the press release is attached as Exhibit 99.1.

ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS

     (d) Exhibits:

Exhibit No.		Description		Furnished Herewith
99.1		Text of Press Release, dated August 7, 2006		X

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 hereunto duly authorized.

Dated: August 8, 2006		Origen Financial, Inc.
		By:		/s/ W. Anderson Geater, Jr.   W. Anderson Geater, Jr., Chief Financial Officer

ORIGEN FINANCIAL, INC.

EXHIBIT INDEX

Exhibit No.		Description		Furnished Herewith
99.1		Text of Press Release, dated August 7, 2006		X

Exhibit 99.1

At Origen Financial:		At Financial Relations Board:
W. Anderson Geater		Leslie Loyet
Chief Financial Officer		(312) 640-6672
866.4 ORIGEN		lloyet@frbir.com
FOR IMMEDIATE RELEASE
MONDAY, AUGUST 7, 2006

ORIGEN FINANCIAL ANNOUNCES SECOND QUARTER 2006 RESULTS;
DECLARES DIVIDEND OF $0.03 PER SHARE

SOUTHFIELD, MI -August 7, 2006 — Origen Financial, Inc. (NASDAQ: ORGN), a real estate investment trust that originates and services manufactured housing loans, today announced net income of $2.0 million, or $0.08 per share, for the quarter ended June 30, 2006, compared with net income of $1.5 million, or $0.06 per share, for the quarter ended June 30, 2005. Origen’s Board of Directors declared a dividend payment for the second quarter of $0.03 per share to be paid to holders of Origen’s common stock of record on August 18, 2006. The dividend will be paid on August 31, 2006, and will approximate $0.8 million. The Board of Directors takes into consideration the differences between net income as determined by Generally Accepted Accounting Principles (“GAAP”) and estimated REIT taxable net income in the determination of dividend payments.

Highlights for Quarter

	•		Loan origination volume increased 10% to $76.8 million versus a year ago.
	•		Loans processed for third parties totaled $16.9 million for the quarter, an increase of 61% over the second quarter 2005.
	•		Total revenue increased 24% to $22.3 million versus $18.0 million for the prior year quarter.
	•		Non-performing loans as a percent of average outstanding loan principal balances improved to 0.9% at June 30, 2006, from 1.5% a year ago.
	•		Origen Servicing, Inc. received the servicer quality rating of SQ2-, or above average, from Moody’s Investors Service.

Financial Highlights

	•		Interest income was $18.1 million for the second quarter 2006, an increase of 23 percent, primarily due to a 27 percent increase over the same period a year ago in the average owned loan portfolio. Non-interest income increased 24 percent over the prior year’s second quarter to $4.2 million.
	•		Interest expense for the second quarter 2006 increased 54 percent to $10.3 million from $6.7 million for last year’s second quarter as a result of increased borrowings relating to loan originations, as well as continuing increases in the LIBOR benchmark rate on Origen’s warehouse line of credit.

	•		The provision for credit losses was $1.2 million for the second quarter 2006 compared with $1.6 million for the same quarter 2005, a decrease of 27 percent, despite an increase in owned loan balances between the quarters of 26 percent. The decrease in provision reflects the continued improvement in the overall quality of the owned loan portfolio as well as smaller than anticipated losses to date resulting from hurricanes Rita and Katrina.
	•		Second quarter 2006 non-interest expenses were $8.8 million, a 7 percent increase compared with $8.2 million for the year ago quarter. Most of the $0.6 million increase was personnel related, primarily attributable to costs associated with Sarbanes-Oxley compliance and accrued amounts relating to merit compensation.

Portfolio Performance

At June 30, 2006, loans 60 or more days delinquent were 0.8 percent of the owned loan portfolio compared to 1.3 percent at December 31, 2005, and 1.4 percent at June 30, 2005. Net charge-offs totaled $2.1 million for both the second quarter 2006 and 2005.

Ronald A. Klein, Origen’s chief executive officer, stated, “Overall Origen had a very strong second quarter. We again increased quarterly earnings both sequentially and year-over-year, and as with last quarter increased loan originations 10 percent over the prior year period. This was accomplished despite rising interest costs and a decline in the shipments of new manufactured houses in the quarter. Additionally, our portfolio performance continues to exceed our expectations. This is the result of our strong focus on credit and servicing as evidenced by Origen receiving an SQ2- servicer rating by Moody’s. We are very proud of this achievement and are hopeful that as a result we will be able to improve our future loan securitization executions.”

Earnings Call and Webcast

A conference call and webcast have been scheduled for August 8, 2006, at 11:00 a.m. EST to discuss second quarter results. The call may be accessed on Origen’s web site at www.origenfinancial.com or by dialing 800-946-0786. A replay will be available through August 15, 2006 by dialing 888-203-1112, passcode 7122411. You may also access the replay on Origen’s website for 90 days after the event.

Forward-Looking Statements

This press release contains various “forward-looking statements” within the meaning of the Securities Act of 1933 and the Securities Exchange Act of 1934, and Origen intends that such forward-looking statements will be subject to the safe harbors created thereby. The words “will,” “may,” “could,” “expect,” “anticipate,” “believes,” “intends,” “should,” “plans,” “estimates,” “approximate” and similar expressions identify these forward-looking statements. These forward-looking statements reflect Origen’s current views with respect to future events and financial performance, but involve known and unknown risks and uncertainties, both general and specific to the matters discussed in this press release. These risks and uncertainties may cause Origen’s actual results to be materially different from any future results expressed or implied by such forward-looking statements. Such risks and uncertainties include, among others, the foregoing assumptions and those risks referenced under the headings entitled “Factors That May Affect Future Results” or “Risk Factors” contained in Origen’s filings with the Securities and Exchange Commission. The forward-looking statements contained in this press release speak only as of the date hereof and Origen expressly disclaims any obligation to provide public

updates, revisions or amendments to any forward- looking statements made herein to reflect changes in Origen’s expectations or future events.

About Origen Financial, Inc.

Origen is an internally managed and internally advised company that has elected to be taxed as a real estate investment trust. Based in Southfield, Michigan, with significant operations in Ft. Worth, Texas, Origen is a national consumer manufactured housing lender and servicer. It offers a complete line of home only products and land home conforming and non-conforming products. Origen also provides servicing for manufactured home only and land home loans.

For more information about Origen, please visit www.origenfinancial.com.

ORIGEN FINANCIAL, INC.
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)

		(Unaudited)
		June 30,				December 31,
		2006				2005
ASSETS
Assets
Cash and Equivalents		$	1,641			$	8,307
Restricted Cash			14,094				13,635
Investment Securities			41,543				41,914
Loans Receivable			856,927				768,410
Premises & Equipment			3,381				3,558
Goodwill			32,277				32,277
Other Assets			27,365				24,902
Total Assets		$	977,228			$	893,003
LIABILITIES AND STOCKHOLDERS’ EQUITY
Liabilities
Warehouse Financing		$	190,189			$	65,411
Securitization Financing			534,346				578,503
Repurchase Agreements			23,582				23,582
Note Payable			781				2,212
Other Liabilities			22,360				23,344
Total Liabilities			771,258				693,052
Equity			205,970				199,951
Total Liabilities and Equity		$	977,228			$	893,003

ORIGEN FINANCIAL, INC.
CONSOLIDATED STATEMENT OF EARNINGS
(Dollars in thousands, except for share data)
(Unaudited)

		Three Months Ended								Six Months Ended
		June, 30								June, 30
		2006				2005				2006				2005
Interest Income
Total Interest Income		$	18,057			$	14,622			$	35,265			$	27,788
Total Interest Expense			10,282				6,681				19,877				12,091
Net Interest Income Before Losses			7,775				7,941				15,388				15,697
Provision for Loan Losses			1,201				1,645				3,326				3,675
Net Interest Income After Losses			6,574				6,296				12,062				12,022
Non-interest Income			4,209				3,396				8,388				6,676
Non-interest Expenses:
Total Personnel			6,300				5,697				12,267				11,178
Total Loan Origination & Servicing			336				380				712				794
State Taxes			77				77				175				190
Total Other Operating			2,066				2,025				4,158				4,016
Total Non-interest Expenses			8,779				8,179				17,312				16,178
Net Income Before Cumulative Effect of Change in Accounting Principle		$	2,004			$	1,513			$	3,138			$	2,520
Cumulative Effect of Change in Accounting Principle			—				—				46				—
Net Income		$	2,004			$	1,513			$	3,184			$	2,520
Weighted Average Common Shares Outstanding			25,110,575				24,818,544				25,046,090				24,776,139
Weighted Average Common Shares Outstanding, Diluted			25,149,949				24,818,544				25,137,379				24,896,126
Earnings Per Share on Basic Average Shares Outstanding		$	0.08			$	0.06			$	0.13			$	0.10
Earnings Per Share on Diluted Average Shares Outstanding		$	0.08			$	0.06			$	0.13			$	0.10

 

 

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C.

FORM 10-Q

þ		Quarterly report pursuant to Section 13 or 15 (d) of the Securities Exchange Act of 1934

FOR THE QUARTERLY PERIOD ENDED June 30, 2006.

o		Transition report pursuant to Section 13 or 15 (d) of the Securities Exchange Act of 1934

For the Transition Period From                      to                     

Origen Financial, Inc.

(Exact Name of Registrant as Specified in its Charter)

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 þ No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer o Accelerated filer þ Non-accelerated filer o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes o No þ

Number of shares of Common Stock, $.01 par value, outstanding as of August 1, 2006: 25,788,901

 

 

Origen Financial, Inc.

Index

						Page
Part I Financial Information
Item 1.		Financial Statements (Unaudited)
				Consolidated Balance Sheets as of June 30, 2006 and December 31, 2005			3
				Consolidated Statements of Earnings for the periods ended June 30, 2006 and 2005			4
				Consolidated Statements of Comprehensive Income (Loss) for the periods ended June 30, 2006 and 2005			5
				Consolidated Statements of Cash Flows for the six months ended June 30, 2006 and 2005			6
				Notes to Consolidated Financial Statements			7
Item 2.		Management’s Discussion and Analysis of Financial Condition and Results of Operations					18
Item 3.		Quantitative and Qualitative Disclosures about Market Risk					29
Item 4.		Controls and Procedures					31
Part II Other Information
Item 6.		Exhibits and Reports on Form 8-K					31
				Signatures			33

Part I. Financial Information

Origen Financial, Inc.

		June 30,				December 31,
		2006				2005
		(Unaudited)
ASSETS
Assets
Cash and cash equivalents		$	1,641			$	8,307
Restricted cash			14,094				13,635
Investments held to maturity			41,543				41,914
Loans receivable, net of allowance for losses of $8,779 and $10,017, respectively			856,927				768,410
Furniture, fixtures and equipment, net			3,381				3,558
Goodwill			32,277				32,277
Other assets			27,365				24,902
Total assets		$	977,228			$	893,003
LIABILITIES AND STOCKHOLDERS’ EQUITY
Liabilities
Warehouse financing		$	190,189			$	65,411
Securitization financing			534,346				578,503
Repurchase agreements			23,582				23,582
Notes payable — servicing advances			781				2,212
Other liabilities			22,360				23,344
Total liabilities			771,258				693,052
Stockholders’ Equity
Preferred stock, $.01 par value, 10,000,000 shares authorized; 125 shares issued and outstanding at June 30, 2006 and December 31, 2005			125				125
Common stock, $.01 par value, 125,000,000 shares authorized; 25,613,901 and 25,450,726 shares issued and outstanding at June 30, 2006 and December 31, 2005, respectively			256				255
Additional paid-in-capital			219,123				218,366
Accumulated other comprehensive income			3,748				907
Distributions in excess of earnings			(17,282	)			(19,702	)
Total stockholders’ equity			205,970				199,951
Total liabilities and stockholders’ equity		$	977,228			$	893,003

The accompanying notes are an integral part of these financial statements.

Origen Financial, Inc.

		Three Months Ended								Six Months Ended
		June 30,								June 30,
		2006				2005				2006				2005
Interest Income
Total interest income		$	18,057			$	14,622			$	35,265			$	27,788
Total interest expense			10,282				6,681				19,877				12,091
Net interest income before loan losses			7,775				7,941				15,388				15,697
Provision for credit losses			1,201				1,645				3,326				3,675
Net interest income after loan losses			6,574				6,296				12,062				12,022
Non-interest income			4,209				3,396				8,388				6,676
Non-interest Expenses
Personnel			6,300				5,697				12,267				11,178
Loan origination and servicing			336				380				712				794
State business taxes			77				77				175				190
Other operating			2,066				2,025				4,158				4,016
Total non-interest expense			8,779				8,179				17,312				16,178
Net income before cumulative effect of change in accounting principle		$	2,004			$	1,513			$	3,138			$	2,520
Cumulative effect of change in accounting principle			—				—				46				—
NET INCOME		$	2,004			$	1,513			$	3,184			$	2,520
Weighted average common shares outstanding			25,110,575				24,818,544				25,046,090				24,776,139
Weighted average common shares outstanding, diluted			25,149,949				24,911,198				25,137,379				24,899,662
Earnings per common share before cumulative effect of change in accounting principle:
Basic		$	0.08			$	0.06			$	0.12			$	0.10
Diluted		$	0.08			$	0.06			$	0.12			$	0.10
Earnings per common share:
Basic		$	0.08			$	0.06			$	0.13			$	0.10
Diluted		$	0.08			$	0.06			$	0.13			$	0.10

The accompanying notes are an integral part of these financial statements.

Origen Financial, Inc.

		Three Months Ended								Six Months Ended
		June 30,								June 30,
		2006				2005				2006				2005
Net income		$	2,004			$	1,513			$	3,184			$	2,520
Other comprehensive income (loss):
Net unrealized gain (loss) on interest rate swaps			1,527				(2,467	)			2,848				(1,098	)
Reclassification adjustment for net realized (gains) losses included in net income			(12	)			91				(7	)			159
Total other comprehensive income (loss)			1,515				(2,376	)			2,841				(939	)
Comprehensive income (loss)		$	3,519			$	(863	)		$	6,025			$	1,581

The accompanying notes are an integral part of these financial statements.

Origen Financial, Inc.

		2006				2005
Cash Flows From Operating Activities
Net income		$	3,184			$	2,520
Adjustments to reconcile net income to cash provided by operating activities:
Provision for credit losses			3,326				3,675
Investment impairment			114				—
Depreciation and amortization			3,051				3,932
Compensation expense recognized under share-based compensation plans			1,092				1,292
Cumulative effect of change in accounting principle			(46	)			—
Increase in other assets			(1,795	)			(1,081	)
Decrease in accounts payable and other liabilities			(983	)			(466	)
Net cash provided by operating activities			7,943				9,872
Cash Flows From Investing Activities
Increase in restricted cash			(459	)			(1,676	)
Purchase of investment securities			—				(4,240	)
Origination and purchase of loans			(139,915	)			(158,989	)
Principal collections on loans			42,341				35,109
Proceeds from sale of repossessed houses			5,720				5,638
Capital expenditures			(342	)			(1,301	)
Net cash used in investing activities			(92,655	)			(125,459	)
Cash Flows From Financing Activities
Dividends paid			(764	)			(2,545	)
Repurchase and retirement of common stock			(288	)			(449	)
Proceeds from securitization financing			—				164,901
Repayment of securitization financing			(44,249	)			(30,634	)
Proceeds from advances under repurchase agreements			—				2,280
Repayment of advances under repurchase agreements			—				(360	)
Proceeds from warehouse financing			129,284				137,093
Repayment of warehouse financing			(4,506	)			(162,338	)
Change in servicing advances, net			(1,431	)			1,774
Net cash provided by financing activities			78,046				109,722
NET DECREASE IN CASH AND CASH EQUIVALENTS			(6,666	)			(5,865	)
Cash and cash equivalents, beginning of period			8,307				9,293
Cash and cash equivalents, end of period		$	1,641			$	3,428
Supplemental disclosures of cash flow information:
Interest paid		$	19,394			$	11,206
Non cash financing activities:
Non-vested common stock issued as unearned compensation		$	1,322			$	2,156
Loans transferred to repossessed assets and held for sale		$	9,589			$	10,219

The accompanying notes are an integral part of these financial statements.

Origen Financial, Inc.

Notes to Consolidated Financial Statements (Unaudited)

Note 1 — Basis of Presentation

     The unaudited consolidated financial statements of Origen Financial, Inc. (the “Company”), have been prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”) for interim financial reporting and the instructions to Form 10-Q and Rule 10-01 of Regulation S-X of the Rules and Regulations of the Securities and Exchange Commission (“SEC”). However, they do not include all of the disclosures necessary for annual financial statements in conformity with US GAAP. The results of operations for the periods ended June 30, 2006 are not necessarily indicative of the operating results anticipated for the full year. Accordingly, these unaudited consolidated financial statements should be read in conjunction with the audited consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2005. The preparation of financial statements in conformity with US GAAP also requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expense during the reporting period. Actual results could differ from those estimates.

     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 and recurring nature.

     Certain prior period amounts have been reclassified to conform to current financial statement presentation.

Note 2 – Recent Accounting Pronouncements

  Accounting for Share-Based Payments

     In December 2004, the Financial Accounting Standards Board (“FASB”) issued Statement of Financial Accounting Standards (“SFAS”) No. 123(R), “Share-Based Payment,” 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 instruments or that may be settled by the issuance of such equity instruments. Under the FASB’s statement, all forms of share-based payments to employees, including employee stock options, must 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. Previous accounting guidance required that the expense relating to so-called fixed plan employee stock options only be disclosed in the footnotes to the financial statements. The statement eliminates the ability to account for share-based compensation transactions using Accounting Principles Board Opinion (“APB”) No. 25, “Accounting for Stock Issued to Employees” for options granted after June 15, 2005. On April 14, 2005, the SEC announced it would permit companies to implement SFAS No. 123(R) at the beginning of their next fiscal year. The Company adopted the new rules reflected in SFAS No. 123(R) using the modified-prospective method on January 1, 2006. The effects of the adoption of SFAS No. 123(R) are discussed further in Note 8.

Origen Financial, Inc.
Notes to Consolidated Financial Statements (Unaudited)

Note 2 – Recent Accounting Pronouncements (Continued)

  Accounting Changes and Error Corrections

     In May 2005, the FASB issued SFAS No. 154, “Accounting Changes and Error Corrections—a replacement of APB Opinion No. 20 and FASB Statement No. 3”. This statement replaces APB No. 20, “Accounting Changes”, and SFAS No. 3, “Reporting Accounting Changes in Interim Financial Statements,” and changes the requirements for the accounting for and reporting of a change in accounting principle. The statement applies to all voluntary changes in accounting principles. It also applies to changes required by an accounting pronouncement in the unusual instance that the pronouncement does not include specific transition provisions. The statement is effective for accounting changes and corrections of errors made in fiscal years beginning after December 15, 2005. The adoption of SFAS No. 154 on January 1, 2006 did not have a material effect on the Company’s financial position or results of operations.

  Accounting for Certain Hybrid Instruments

     In February 2006, the FASB issued SFAS No. 155, “Accounting for Certain Hybrid Instruments,” which allows financial instruments that have embedded derivatives to be accounted for as a whole (eliminating the need to bifurcate the derivative from its host) if the holder elects to account for the whole instrument on a fair value basis. SFAS No. 155 is effective for all financial instruments acquired or issued after the beginning of an entity’s first fiscal year that begins after September 15, 2006. At this time, the Company does not expect the adoption of SFAS No. 155 to have a material impact on its financial position or results of operations.

   Accounting for Servicing of Financial Assets

     In March 2006, the FASB issued SFAS No. 156, “Accounting for Servicing of Financial Assets - An Amendment of FASB Statement No. 140.” This standard amends the guidance in FASB Statement No. 140, Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities. Among other requirements, SFAS No. 156 requires an entity to recognize a servicing asset or servicing liability each time it undertakes an obligation to service a financial asset by entering into a servicing contract in any of the following situations: a transfer of the servicer’s financial assets that meets the requirements for sale accounting; a transfer of the servicer’s financial assets to a qualifying special-purpose entity in a guaranteed mortgage securitization in which the transferor retains all of the resulting securities and classifies them as either available-for-sale securities or trading securities; or an acquisition or assumption of an obligation to service a financial asset that does not relate to financial assets of the servicer or its consolidated affiliates. SFAS No. 156 is effective as of the beginning of an entity’s first fiscal year that begins after September 15, 2006. At this time, the Company does not expect the adoption of SFAS No. 156 to have a material impact on its financial position or results of operations.

  Accounting for Uncertainty in Income Taxes

     In June 2006, the FASB issued FASB Interpretation No. 48 (FIN No. 48), “Accounting for Uncertainty in Income Taxes – an interpretation of FASB Statement No. 109.” FIN No. 48 prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. FIN No. 48 also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition. FIN No. 48 is effective for fiscal years beginning after December 15, 2006. At this time, the Company does not expect the adoption of FIN No. 48 to have a material impact on its financial position or results of operations.

Origen Financial, Inc.
Notes to Consolidated Financial Statements (Unaudited)

Note 3 – Per Share Data

     Basic earnings per share (“EPS”) is computed by dividing net income by the weighted average number of common shares outstanding during the period. Diluted EPS incorporates the potential dilutive effect of common stock equivalents outstanding on an average basis during the period. Dilutive common shares primarily consist of employee stock options and non-vested common stock. Certain adjustments have been made to the number of weighted average shares outstanding for diluted EPS for the three and six months ended June 30, 2005 to correct for a computation error. The adjustments had no effect on reported diluted EPS. The following table presents a reconciliation of basic and diluted EPS for the three months and six months ended June 30, 2006 and 2005 (in thousands, except per share data):

		Three Months Ended								Six Months Ended
		June 30,								June 30,
		2006				2005				2006				2005
Numerator:
Net income		$	2,004			$	1,513			$	3,184			$	2,520
Preferred stock dividends			(4	)			(4	)			(8	)			(8	)
Income available to common shareholders		$	2,000			$	1,509			$	3,176			$	2,512
Denominator:
Weighted average common shares for basic EPS			25,111				24,818				25,046				24,776
Effect of dilutive securities:
Weighted average non-vested stock awards			39				93				91				124
Weighted average common shares for diluted EPS			25,150				24,911				25,137				24,900
Basic EPS		$	0.08			$	0.06			$	0.13			$	0.10
Diluted EPS		$	0.08			$	0.06			$	0.13			$	0.10

Note 4– Investments

     The Company follows the provisions of SFAS No. 115, “Accounting For Certain Investments in Debt and Equity Securities,” and the American Institute of Certified Public Accountants (“AICPA”) Statement of Position 03-3 (“SOP 03-3”), “Accounting for Certain Loans or Debt Securities Acquired in a Transfer,” in reporting its investments. The securities are carried on the Company’s balance sheet at an amortized cost of $41.5 million at June 30, 2006, which approximates their fair value.

     Investments Accounted for Under the Provisions of SFAS No. 115

     The carrying value of investments accounted for under the provisions of SFAS No. 115 was approximately $37.9 million at June 30, 2006 and is included in investments in the consolidated balance sheet. These investments consisted of three asset-backed securities with principal amounts of $32.0 million, $6.8 million and $8.6 million, respectively, at June 30, 2006. The securities are collateralized by manufactured housing loans and are classified as held-to-maturity. They have contractual maturity dates of July 28, 2033, December 28, 2033 and December 28, 2033, respectively. During the three and six months ended June 30, 2006, the Company did not purchase or sell any securities. As prescribed by the provisions of SFAS No. 115 the Company has both the intent and ability to hold the securities to maturity. The securities will not be sold in response to changing market conditions, changing fund sources or terms, changing availability and yields on alternative investments or other asset liability management reasons. The securities are regularly measured for impairment through the use of a discounted cash flow analysis based on the historical performance of the underlying loans that collateralize the securities. If it is determined that there has been a decline in fair value below amortized cost and the decline is other-than–temporary, the cost basis of the security is written down to fair value as a new cost basis and the amount of the write-down is included in earnings. No impairment was recorded relating to these securities during the three and six months ended June 30, 2006.

Origen Financial, Inc.
Notes to Consolidated Financial Statements (Unaudited)

Note 4– Investments (Continued)

     Investments Accounted for Under the Provisions of SOP 03-3

     Debt securities acquired with evidence of deterioration of credit quality since origination are accounted for under the provisions of the American Institute of Certified Public Accountants (“AICPA”) Statement of Position 03-3 (“SOP 03-3”), “Accounting for Certain Loans or Debt Securities Acquired in a Transfer.” The carrying value of debt securities accounted for under the provisions of SOP 03-3 was approximately $3.6 million at June 30, 2006 and is included in investments in the consolidated balance sheet. During the three and six months ended June 30, 2006, the Company did not purchase or sell any securities. The securities are regularly measured for impairment through the use of a discounted cash flow analysis based on the historical performance of the underlying loans that collateralize the securities. If it is determined that there has been a decline in fair value below amortized cost and the decline is other-than–temporary, the cost basis of the security is written down to fair value as a new cost basis and the amount of the write-down is included in earnings. An other-than-temporary impairment of $114,000 was recorded during the three and six months ended June 30, 2006, as a result of a change in the Company’s estimates of expected future cash flows.

Note 5 – Loans Receivable

     The carrying amounts of loans receivable consisted of the following (in thousands):

		June 30, 2006				December 31, 2005
Manufactured housing loans — securitized		$	650,896			$	695,701
Manufactured housing loans — unsecuritized			215,275				85,949
Accrued interest receivable			4,328				4,078
Deferred fees			(773	)			(2,100	)
Discount on purchased loans			(3,592	)			(4,773	)
Allowance for purchased loans			(428	)			(428	)
Allowance for loan loss			(8,779	)			(10,017	)
		$	856,927			$	768,410

     The Company originates and purchases loans collateralized by manufactured houses with the intent to securitize them. Under the current legal structure of the securitization program, the Company transfers manufactured housing loans it originates and purchases to a trust for cash. The trust then sells asset-backed bonds secured by the loans to investors. These loan securitizations are structured as financing transactions. 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.

     Total principal balance of loans serviced that the Company has previously securitized and accounted for as a sale was approximately $138.1 million at June 30, 2006. Delinquency statistics (including repossessed inventory) on those loans are as follows at June 30, 2006 (dollars in thousands):

		No. of				Principal				% of
Days delinquent		Loans				Balance				Portfolio
31-60			110			$	4,159				3.0	%
61-90			54				2,256				1.6	%
Greater than 90			107				4,549				3.3	%

Origen Financial, Inc.
Notes to Consolidated Financial Statements (Unaudited)

Note 6 – Allowance for Credit Losses

     The allowance for credit losses and related additions and deductions to the allowance were as follows for the three months and six months ended June 30 (in thousands):

		Three Months Ended								Six Months Ended
		June 30,								June 30,
		2006				2005				2006				2005
Balance at beginning of period		$	9,670			$	5,294			$	10,017			$	5,315
Provision for loan losses			1,201				1,645				3,326				3,675
Transfers from recourse liability			—				925				—				1,913
Gross charge-offs			(4,167	)			(4,273	)			(8,623	)			(10,207	)
Recoveries			2,075				2,138				4,059				5,033
Balance at end of period		$	8,779			$	5,729			$	8,779			$	5,729

Note 7– Debt

     Total debt outstanding was as follows (in thousands):

		June 30,				December 31,
		2006				2005
Warehouse financing		$	190,189			$	65,411
Securitization financing			534,346				578,503
Repurchase agreements			23,582				23,582
Notes payable – servicing advances			781				2,212
		$	748,898			$	669,708

     Warehouse Financing – Citigroup – The Company, through its primary operating subsidiary Origen Financial L.L.C., currently has a short term securitization facility used for warehouse financing with Citigroup Global Markets Realty Corporation (“Citigroup”). Under the terms of the agreement, originally entered into in March 2003 and amended periodically, most recently in March 2006, the Company pledges loans as collateral and in turn is advanced funds. The facility has a maximum advance amount of $200 million at an annual interest rate equal to LIBOR plus a spread. Additionally, the facility includes a $35 million supplemental advance amount that is collateralized by the Company’s residual interests in its 2004-A, 2004-B, 2005-A and 2005-B securitizations. The facility matures on March 22, 2007. The outstanding balance on the facility was approximately $190.2 million at June 30, 2006. At June 30, 2006 all financial covenants were met.

     Securitization Financing – 2004-A Securitization - On February 11, 2004, the Company completed a securitization of approximately $238.0 million in principal balance of manufactured housing loans. The securitization was accounted for as a financing. As part of the securitization the Company, through a special purpose entity, 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 5.12%. 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. The outstanding balance on the 2004-A securitization notes was approximately $125.4 million at June 30, 2006.

Origen Financial, Inc.
Notes to Consolidated Financial Statements (Unaudited)

Note 7– Debt (Continued)

     Securitization Financing – 2004-B Securitization – On September 29, 2004, the Company completed a securitization of approximately $200.0 million in principal balance of manufactured housing loans. The securitization was accounted for as a financing. As part of the securitization the Company, through a special purpose entity, issued $169.0 million in notes payable. The notes are stratified into seven different classes and pay interest at a duration-weighted average rate of approximately 5.27%. The notes have a contractual maturity date of June 2013 with respect to the Class A-1 notes; December 2017, with respect to the Class A-2 notes; August 2021, with respect to the Class A-3 notes; and November 2035, with respect to the Class A-4, Class M-1, Class M-2 and Class B-1 notes. The outstanding balance on the 2004-B securitization notes was approximately $124.9 million June 30, 2006.

     Securitization Financing – 2005-A Securitization - On May 12, 2005, the Company completed a securitization of approximately $190.0 million in principal balance of manufactured housing loans. The securitization was accounted for as a financing. As part of the securitization the Company, through a special purpose entity, issued $165.3 million in notes payable. The notes are stratified into seven different classes and pay interest at a duration-weighted average rate of approximately 5.30%. The notes have a contractual maturity date of July 2013 with respect to the Class A-1 notes; May 2018, with respect to the Class A-2 notes; October 2021, with respect to the Class A-3 notes; and June 2036, with respect to the Class A-4, Class M-1, Class M-2 and Class B notes. The outstanding balance on the 2005-A securitization notes was approximately $138.6 million at June 30, 2006.

     Securitization Financing – 2005-B Securitization – On December 15, 2005, the Company completed a securitization of approximately $175.0 million in principal balance of manufactured housing loans. The securitization was accounted for as a financing. As part of the securitization the Company, through a special purpose entity, issued $156.2 million in notes payable. The notes are stratified into eight different classes and pay interest at a duration-weighted average rate of approximately 6.15%. The notes have a contractual maturity date of February 2014 with respect to the Class A-1 notes; December 2018, with respect to the Class A-2 notes; May 2022, with respect to the Class A-3 notes; and January 2037, with respect to the Class A-4, Class M-1, Class M-2 , Class B-1 and B-2 notes. The outstanding balance on the 2005-B securitization notes was approximately $145.4 million at June 30, 2006.

     Repurchase Agreements – Citigroup - The Company has entered into four repurchase agreements with Citigroup. Three of the repurchase agreements are for the purpose of financing the purchase of investments in three asset backed securities with principal balances of $32.0 million, $3.1 million and $3.7 million respectively. The fourth repurchase agreement is for the purpose of financing a portion of the Company’s interest in the 2004-B securitization with a principal balance of $4.0 million. Under the terms of the agreements the Company sells its interest in the securities with an agreement to repurchase them at a predetermined future date at the principal amount sold plus an interest component. The securities are financed at an amount equal to 75% of their current market value as determined by Citigroup. Typically the repurchase agreements are rolled over for 30 day periods when they expire. The annual interest rates on the agreements are equal to LIBOR plus a spread. The repurchase agreements had outstanding principal balances of approximately $16.8 million, $1.7 million, $2.1 million and $3.0 million, respectively, at June 30, 2006.

Origen Financial, Inc.
Notes to Consolidated Financial Statements (Unaudited)

Note 7 – Debt (Continued)

     Note Payable – Servicing Advances – JPMorgan Chase Bank, N.A. – The Company currently has a revolving credit facility with JPMorgan Chase Bank, N.A. Under the terms of the facility the Company can borrow up to $5.0 million for the purpose of funding required principal and interest advances on manufactured housing 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 housing loans. The bank’s prime interest rate is payable on the outstanding balance. To secure the loan, the Company has granted JPMorgan Chase a security interest in substantially all its assets excluding securitized assets. The expiration date of the facility is December 31, 2006. The outstanding balance on the facility was approximately $0.8 million at June 30, 2006. At June 30, 2006 all financial covenants were met.

     The average balance and average interest rate of outstanding debt was as follows (dollars in thousands):

		June 30, 2006								December 31, 2005
		Average				Average				Average				Average
		Balance				Rate				Balance				Rate
Warehouse financing – Citigroup		$	121,581				6.7	%		$	139,539				5.2	%
Securitization financing – 2004-A securitization			132,932				5.2	%			154,295				4.9	%
Securitization financing – 2004-B securitization			131,511				5.4	%			149,499				5.1	%
Securitization financing – 2005-A securitization			145,501				5.2	%			101,441				5.1	%
Securitization financing – 2005-B securitization			150,289				5.7	%			7,228				5.5	%
Repurchase agreements — Citigroup			23,582				5.6	%			22,793				4.2	%
Note payable — servicing advances – JPMorgan Chase Bank, N.A.			498				9.5	%			710				7.5	%

     At June 30, 2006, the total of maturities and amortization of debt during the next five years are approximately as follows: 2006 — $156.2 million; 2007 — $162.2 million; 2008 — $59.2 million; 2009 — $52.2 million; 2010 — $46.0 million and $273.1 million thereafter.

Note 8 – Share-Based Compensation Plan

     The Company’s equity incentive plan has approximately 1.8 million shares of common stock reserved for issuance as either stock options or non-vested stock grants. As of June 30, 2006, approximately 522,000 shares of common stock remained available for issuance, as either stock options or non-vested stock grants, under the plan. The compensation cost that has been charged against income for those plans was $514,000 and $1,092,000 for the three and six months ended June 30, 2006, respectively, and $632,000 and $1,292,000 for the three and six months ended June 30, 2005, respectively.

     The Company adopted SFAS No. 123(R) on January 1, 2006, using the modified-prospective transition method, to account for its equity incentive plan. Prior to January 1, 2006, as permitted under the provisions of SFAS No. 123, “Accounting for Stock-Based Compensation,” as amended, the Company had chosen to recognize compensation expense using the intrinsic value-based method of valuing stock options prescribed in APB No. 25, “Accounting for Stock Issued to Employees” and related interpretations. Under the intrinsic value-based method, compensation cost is measured as the amount by which the quoted market price of the Company’s stock at the date of grant exceeds the stock option exercise price. All options granted by the Company prior to the adoption of SFAS 123(R) were granted at a fixed price not less than the market value of the underlying common stock on the date of grant and, therefore, were not included in compensation expense, prior to the adoption of SFAS No. 123(R). Results for prior periods have not been restated.

Origen Financial, Inc.
Notes to Consolidated Financial Statements (Unaudited)

Note 8 – Share-Based Compensation Plan (Continued)

     As a result of adopting SFAS No. 123(R) on January 1, 2006, the Company’s net income after the cumulative effect of a change in accounting principle was $44,000 lower for the three months ended June 30, 2006 and $14,000 higher for the six months ended June 30, 2006 than if it had continued to account for share-based compensation under APB No. 25. There would have been no change in basic or diluted earnings per share for the three and six months ended June 30, 2006, if the company had not adopted SFAS No. 123(R). The effect of this change from applying the original provisions of SFAS No. 123 had no effect on cash flow from operations and financing activities.

     Stock Options

     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 Compensation Committee of the Board of Directors as the administrator of the Company’s equity incentive plan, and options that have been issued to date generally vest over a two-year period, have 10-year contractual terms and a 5-year expected option term. The Company does not pay dividends or make distributions on unexercised options. As of June 30, 2006 there was $48,000 of total unrecognized compensation cost related to stock options granted under the equity incentive plan. That cost is expected to be recognized over a weighted-average period of 2.4 years.

     The following table summarizes the activity relating to the Company’s stock options for the six months ended June 30, 2006:

										Weighted
						Weighted				Average
						Average				Remaining
		Number of				Exercise				Contractual
		Options				Price				Term
Options outstanding at January 1, 2006			255,500			$	10.00				7.9
Granted			—				—				—
Exercised			—				—				—
Forfeited			(7,000	)		$	10.00				7.8
Options outstanding at June 30, 2006			248,500			$	10.00				7.4
Options exercisable at June 30, 2006			248,500			$	10.00				7.4

     The following table illustrates the effect on net income and earnings per share if the Company had applied the fair value recognition provisions of SFAS No. 123 to options granted under the Company’s equity incentive plan for the three and six months ended June 30, 2005. Note that the pro forma disclosures are provided for 2005 because employee stock options were not accounted for using the fair-value method during those periods. Disclosures for 2006 are not presented because share-based payments have been accounted for under SFAS No. 123(R)’s fair-value method. For purposes of this pro forma disclosure, the value of the options is estimated using a binomial option-pricing model.

Origen Financial, Inc.
Notes to Consolidated Financial Statements (Unaudited)

Note 8 – Share-Based Compensation Plan (Continued)

		Three Months				Six Months
		Ended				Ended
		June 30,				June 30,
		2005				2005
Net income available to common shareholders		$	1,509			$	2,512
Stock option compensation cost		$	(3	)		$	(6	)
Pro forma net income available to common shareholders		$	1,506			$	2,506
Basic income per share as reported		$	0.06			$	0.10
Pro forma basic income per share		$	0.06			$	0.10
Diluted income per share as reported		$	0.06			$	0.10
Pro forma diluted income per share		$	0.06			$	0.10

     Non-Vested Stock Awards

     The Company grants non-vested stock awards to certain directors, officers and employees under the equity incentive plan. The grantees of the non-vested stock awards are entitled to receive all dividends and other distributions paid with respect to the common shares of the Company underlying such non-vested stock awards at the time such dividends or distributions are paid to holders of common shares.

     On June 15, 2006 the Company granted 215,000 non-vested stock awards to certain directors, officers and employees. The stock awards were issued at $6.15 per share and are being expensed over their estimated service periods, which range from three to five years. Compensation expense recognized for these non-vested stock awards was approximately $27,000 for the three months ended June 30, 2006.

     The Company recognized compensation expense for outstanding non-vested stock awards over their vesting periods for an amount equal to the fair value of the non-vested stock awards at grant date. As of June 30, 2006 there was $2.5 million of total unrecognized compensation cost related to non-vested stock awards granted under the equity incentive plan. That cost is expected to be recognized over a weighted-average period of 3.0 years

     The Company recorded a cumulative effect of a change in accounting principle, as a result of the adoption of SFAS No. 123(R), in the amount of $46,000 as of January 1, 2006 to reflect the change in accounting for forfeitures. Results for prior periods have not been restated.

     The following table summarizes the activity relating to the Company’s non-vested stock awards for the six months ended June 30, 2006:

						Weighted
		Number of				Average
		Non-Vested				Grant Date
		Stock Awards				Fair Value
Non-vested at January 1, 2006			469,837			$	8.02
Granted			215,000				6.15
Vested			(269,493	)			8.63
Forfeited			(5,001	)			7.58
Non-vested at June 30, 2006			410,343			$	6.65

Origen Financial, Inc.
Notes to Consolidated Financial Statements (Unaudited)

Note 9 – Derivative Instruments and Hedging Activity

     During the first two quarters of 2006, the Company entered into four forward starting interest rate swaps for the purpose of locking in the designated benchmark interest rate, in this case LIBOR, on a portion of its planned securitization transaction to be completed during the third quarter of 2006. The Company has designated the swaps as cash flow hedges for accounting purposes.

     Under the terms of the swaps the Company will pay fixed rates of 4.79%, 5.11%, 5.09% and 5.42% and receive floating rates equal to the one month LIBOR rate on beginning notional balances of $44.0 million, $20.0 million, $30.0 million and $31.5 million, respectively. The first payment on each of the swaps was paid in July 2006. A rise in rates during the interim period would increase the Company’s borrowing cost in the securitization, but this increase would be offset by the increased value in the right to pay a lower fixed rate during the term of the securitized transaction.

     The hedging transactions were structured at inception to meet the cash flow hedge criteria set forth in SFAS No. 133 “Accounting for Derivative Instruments and Hedging Activities” in order to allow the Company to assume that no ineffectiveness exists. As a result, all changes in the fair value of the derivatives are included in other comprehensive income and such amounts will be amortized into earnings upon commencement of the planned transaction.

     In the event the Company is unable to or declines to enter into the securitization transaction or if the commencement of the securitization transaction is delayed, some or all of the amounts included in other comprehensive income may be immediately included in earnings, as required under SFAS No. 133.

     Additionally, SFAS No. 133 requires all derivative instruments to be carried at fair value in the Company’s balance sheet. The fair value of the forward starting interest rate swaps discussed above approximates an asset of $2.8 million at June 30, 2006.

     The Company previously terminated interest rate swaps related to the 2004-B, 2005-A and 2005-B securitizations. The unamortized gains and losses on these terminated interest rate swaps are included in accumulated other comprehensive income in the consolidated balance sheet. The unamortized losses on the terminated interest rate swaps related to the 2004-B and 2005-A securitizations were approximately $1.3 million and $0.3 million at June 30, 2006, respectively. The unamortized gains on the terminated interest rate swaps related to the 2005-B securitization were approximately $2.5 million at June 30, 2006. Net amortization over the next twelve months is expected to amount to approximately $0.

Note 10 – Stockholders’ Equity

     On April 27, 2006, the Company declared a dividend of $0.03 per common share payable to holders of record as of May 19, 2006. On May 31, 2006 those dividends were paid and totaled approximately $756,000.

Origen Financial, Inc.
Notes to Consolidated Financial Statements (Unaudited)

     Note 11 – Subsequent Events

     On July 14, 2006 the Company granted 175,000 non-vested stock awards to an officer of the Company. The stock awards were issued at $6.16 per share and are being expensed over their estimated service period.

     On July 21, 2006 the Company and Citigroup amended the note purchase agreement related to the Company’s short term securitization facility used for warehouse financing, which was originally entered into in March 2003(See Note 7). The amendment increases the maximum advance amount from $200 million to $225 million for the period July 21, 2006 through August 31, 2006. On September 1, 2006 the maximum advance amount will return to $200 million. The facility matures on March 22, 2007.

     On August 7, 2006, the Company declared a dividend of $0.03 per common share payable to holders of record as of August 18, 2006. Payment of the dividend is planned for August 31, 2006.

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

          This Quarterly Report on Form 10-Q contains various “forward-looking statements” within the meaning of the Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and we intend that such forward-looking statements will be subject to the safe harbors created thereby. For this purpose, any statements contained in this Form 10-Q that relate to prospective events or developments are deemed to be forward-looking statements. Words such as “believes,” “forecasts,” “anticipates,” “intends,” “plans,” “expects,” “will” and similar expressions are intended to identify forward-looking statements. These forward-looking statements reflect our current views with respect to future events and financial performance, but involve known and unknown risks and uncertainties, both general and specific to the matters discussed in this Form 10-Q. These risks and uncertainties may cause our actual results to be materially different from any future results expressed or implied by such forward-looking statements. Such risks and uncertainties include:

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

and those other risk factors discussed under the heading entitled “Risk Factors” and elsewhere in our Annual Report on Form 10-K for the year ended December 31, 2005. All forward-looking statements included in this document are based on information available to us on the date of this Form 10-Q. 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 our consolidated financial condition and results of operations as of and for the periods ended June 30, 2006 in this quarterly report on Form 10-Q should be read in conjunction with our Consolidated Financial Statements and the “Notes to Consolidated Financial Statements” included in our Annual Report on Form 10-K for the year ended December 31, 2005.

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

Overview

     In October 2003, we began operations upon the completion of a private placement of $150 million of our common stock to certain institutional and accredited investors. In February, 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. In the second quarter of 2004, we completed the initial public offering of our common stock. Currently, most of our operations are conducted through Origen Financial L.L.C., 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.

Recent Developments

     In June 2006, Moody’s Investors Service assigned Origen Servicing, Inc., a rating of SQ2- as a Primary Servicer of manufactured housing loans. Origen Servicing, Inc., is a wholly owned subsidiary of Origen Financial, LLC. Moody’s rating is based on the company’s above average collection ability and average servicing stability.

Critical Accounting Policies

     The Company’s consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States of America (US GAAP).

     The financial information contained within our statements is, to a significant extent, financial information that is based on approximate measures of the financial effects of transactions and events that have already occurred. A variety of factors could affect the ultimate value that is obtained either when earning income, recognizing an expense, recovering an asset, or relieving a liability. In some instances we use a discount factor to determine the present value of assets and liabilities. A change in the discount factor could increase or decrease the values of those assets and liabilities and such changes would result in either a beneficial or adverse impact to our financial results. We use historical loss factors, adjusted for current conditions, to determine the inherent loss that may be present in our loan portfolio. Other estimates that we use are fair value of derivatives and expected useful lives of our depreciable assets. We value our derivative contracts at fair value using either readily available, market quoted prices or from information that can be extrapolated to approximate a market price. Additionally, as a result of the adoption of Statement of Financial Accounting Standards (“SFAS”) No. 123(R), “Share-Based Payment,” we make estimates related to future forfeitures of unvested stock awards and stock options. Any change in the estimates of future forfeitures of unvested stock awards and stock options could increase or decrease compensation expense. We are subject to US GAAP that may change from one previously acceptable method to another method. Although the economics of our transactions would be the same, the timing of events that would impact our transactions could change.

     Understanding our accounting policies is fundamental to understanding our consolidated financial position and consolidated results of operations. Details regarding our critical accounting policies are described fully in Note 1 in the “Notes to Consolidated Financial Statements” in our 2005 Annual Report on Form 10-K filed with the Securities and Exchange Commission.

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

Results of Operations

Comparison of the three months ended June 30, 2006 and 2005.

Net Income

     Net income increased $0.5 million to $2.0 million for the three months ended June 30, 2006 compared to net income of $1.5 million for the same period in 2005. The increase is the result of an increase of $0.3 million in net interest income after loan losses and an increase of $0.8 million in non-interest income offset by an increase in non-interest expenses of $0.6 million as described in more detail below.

Interest Income

     Interest income increased 24.0% to approximately $18.1 million compared to approximately $14.6 million. This increase resulted primarily from an increase of $173.6 million or 24.5% in average interest earning assets from $709.5 million to $883.1 million. The increase in interest earning assets includes an increase of approximately $174.8 million in average manufactured housing loans. The weighted average net interest rate on the loan receivable portfolio decreased to 8.2% from 8.3%.

     Interest expense increased $3.6 million, or 53.7%, to $10.3 million from $6.7 million. The majority of our interest expense relates to interest on our loan funding facilities. Average debt outstanding on our loan funding facilities increased $175.5 million to $702.7 million compared to $527.2 million, or 33.3%. The average interest rate on total debt outstanding increased from 4.9% to 5.7%. The higher average interest rate for the three months ended June 30, 2006 compared to the three months ended June 30, 2005 was primarily due to increases in the base LIBOR rate.

     The following table presents information relative to the average balances and interest rates of our interest earning assets and interest bearing liabilities for the three months ended June 30 (dollars in thousands):

		2006												2005
		Average								Yield/				Average								Yield/
		Balance				Interest				Rate				Balance				Interest				Rate
Interest earning assets:
Manufactured housing loans1		$	824,897			$	16,927				8.21	%		$	650,141			$	13,546				8.33	%
Investment securities			41,350				926				8.96	%			41,031				961				9.37	%
Other			16,839				204				4.85	%			18,357				115				2.51	%
Total		$	883,086			$	18,057				8.18	%		$	709,529			$	14,622				8.24	%
Interest bearing liabilities2:
Loan funding facilities		$	702,681			$	9,924				5.65	%		$	527,213			$	6,455				4.90	%
Repurchase agreements			23,582				348				5.90	%			22,091				212				3.84	%
Notes payable – servicing advance			326				10				12.27	%			742				14				7.55	%
Total		$	726,589			$	10,282				5.66	%		$	550,046			$	6,681				4.86	%
Net interest income and interest rate spread						$	7,775				2.52	%						$	7,941				3.38	%
Net yield on average interest earning assets3											3.52	%											4.48	%

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

     The following table sets forth the changes in the components of net interest income for the three months ended June 30, 2006 compared to the three months ended June 30, 2005 (in thousands). The changes in net interest income between periods have been reflected as attributable to either volume or rate changes. For the purposes of this table, changes that are not solely due to volume or rate changes are allocated to rate changes.

		Volume				Rate				Total
Interest earning assets:
Manufactured housing loans		$	14,565			$	(11,184	)		$	3,381
Investment securities			30				(65	)			(35	)
Other			(38	)			127				89
Total interest income		$	14,557			$	(11,122	)		$	3,435
Interest bearing liabilities:
Loan funding facilities		$	8,593			$	(5,124	)		$	3,469
Repurchase agreements			57				79				136
Notes payable – servicing advances			(31	)			27				(4	)
Total interest expense		$	8,619			$	(5,018	)		$	3,601
Decrease in net interest income										$	(166	)

Non-interest Income

     Non-interest income is primarily made up of loan servicing related revenue including loan servicing fees, late charges, commissions on insurance and commitment fees from third-party loan originations. Such revenue increased $0.8 million, or 23.5%, to $4.2 million compared to $3.4 million. The average serviced loan portfolio on which servicing fees are collected increased approximately $120.3 million, or 8.5%, from $1.42 billion to $1.54 billion.

Provision for Losses

     We maintain an allowance for credit losses to cover inherent 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.

     The provision for credit losses decreased 25.0% to $1.2 million from $1.6 million. Net charge-offs against the allowance for loan loss were $2.1 million for three months ended June 30, 2006 and 2005. As a percentage of average loans receivable, net charge-offs, on an annualized basis, decreased to 1.0% compared to 2.1%. We expect net charge-offs as a percentage of average outstanding principal balance to continue to decrease in the future due to the fact that the owned portfolio of loans at June 30, 2006 has a larger concentration of loans originated after December 31, 2001 than was the case for the owned portfolio at June 30, 2005. A change to our underwriting practices and credit scoring model in 2002 has resulted in higher credit quality of loans originated since 2002.

Non-interest Expenses

     Personnel expenses increased approximately $0.6 million, or 10.5%, to $6.3 million compared to $5.7 million. The increase is primarily the result of a $0.4 million increase in annual performance bonuses and a $0.3 million increase in salaries and temporary office staffing expenses, offset by a decrease of $0.1 million in stock compensation expenses.

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

Comparison of the six months ended June 30, 2006 and 2005.

Net Income

     Net income increased $0.7 million to $3.2 million for the six months ended June 30, 2006 compared to net income of $2.5 million for the same period in 2005. The increase is the result of an increase of $1.7 million in non-interest income and an increase of $0.1 million in net interest income after loan losses offset by an increase in non-interest expenses of $1.1 million as described in more detail below.

Interest Income

     Interest income increased 27.0% to approximately $35.3 million compared to approximately $27.8 million. This increase resulted primarily from an increase of $189.4 million or 28.2% in average interest earning assets from $672.4 million to $861.8 million. The increase in interest earning assets includes an increase of approximately $187.6 million in average manufactured housing loans. The weighted average net interest rate on the loan receivable portfolio decreased to 8.2% from 8.4%.

     Interest expense increased $7.8 million, or 64.5%, to $19.9 million from $12.1 million. The majority of our interest expense relates to interest on our loan funding facilities. Average debt outstanding on our loan funding facilities increased $191.6 million to $681.8 million compared to $490.2 million, or 39.1%. The average interest rate on total debt outstanding increased from 4.7% to 5.6%. The higher average interest rate for the six months ended June 30, 2006 compared to the six months ended June 30, 2005 was primarily due to increases in the base LIBOR rate.

     The following table presents information relative to the average balances and interest rates of our interest earning assets and interest bearing liabilities for the six months ended June 30 (dollars in thousands):

		2006												2005
		Average								Yield/				Average								Yield/
		Balance				Interest				Rate				Balance				Interest				Rate
Interest earning assets:
Manufactured housing loans1		$	803,846			$	33,028				8.22	%		$	616,277			$	25,768				8.36	%
Investment securities			41,356				1,877				9.08	%			39,555				1,830				9.25	%
Other			16,594				360				4.34	%			16,538				190				2.30	%
Total		$	861,796			$	35,265				8.18	%		$	672,370			$	27,788				8.27	%
Interest bearing liabilities2:
Loan funding facilities		$	681,814			$	19,192				5.63	%		$	490,222			$	11,682				4.77	%
Repurchase agreements			23,582				661				5.61	%			21,358				386				3.61	%
Notes payable – servicing advance			498				24				9.64	%			573				23				8.03	%
Total		$	705,894			$	19,877				5.63	%		$	512,153			$	12,091				4.72	%
Net interest income and interest rate spread						$	15,388				2.55	%						$	15,697				3.54	%
Net yield on average interest earning assets3											3.57	%											4.67	%

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

     The following table sets forth the changes in the components of net interest income for the six months ended June 30, 2006 compared to the six months ended June 30, 2005 (in thousands). The changes in net interest income between periods have been reflected as attributable to either volume or rate changes. For the purposes of this table, changes that are not solely due to volume or rate changes are allocated to rate changes.

		Volume				Rate				Total
Interest earning assets:
Manufactured housing loans		$	15,685			$	(8,425	)		$	7,260
Investment securities			167				(120	)			47
Other			1				169				170
Total interest income		$	15,853			$	(8,376	)		$	7,477
Interest bearing liabilities:
Loan funding facilities		$	9,131			$	(1,621	)		$	7,510
Repurchase agreements			80				195				275
Notes payable – servicing advances			(6	)			7				1
Total interest expense		$	9,205			$	(1,419	)		$	7,786
Decrease in net interest income										$	(309	)

Non-interest Income

     Non-interest income is primarily made up of loan servicing related revenue including loan servicing fees, late charges, commissions on insurance and commitment fees from third-party loan originations. Such revenue increased $1.7 million, or 25.4%, to $8.4 million compared to $6.7 million. The average serviced loan portfolio on which servicing fees are collected increased approximately $134.6 million, or 9.6%, from $1.40 billion to $1.53 billion.

Provision for Losses

     We maintain an allowance for credit losses to cover inherent 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.

     The provision for credit losses decreased 10.8% to $3.3 million from $3.7 million. Net charge-offs against the allowance for loan loss decreased 11.5% from $5.2 million, to $4.6 million. As a percentage of average loans receivable, net charge-offs, on an annualized basis, decreased to 1.1% compared to 1.7%. We expect net charge-offs as a percentage of average outstanding principal balance to continue to decrease in the future due to the fact that the owned portfolio of loans at June 30, 2006 has a larger concentration of loans originated after December 31, 2001 than was the case for the owned portfolio at June 30, 2005. A change to our underwriting practices and credit scoring model in 2002 has resulted in higher credit quality of loans originated since 2002.

Non-interest Expenses

     Personnel expenses increased approximately $1.1 million, or 9.8%, to $12.3 million compared to $11.2 million. The increase is primarily the result of a $0.6 million increase in annual performance bonuses and a $0.7 million increase in salaries and temporary office staffing expenses, offset by a decrease of $0.2 million in stock compensation expenses.

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

Receivable Portfolio and Asset Quality

     Net loans receivable outstanding increased 11.5% to $856.9 million at June 30, 2006 compared to $768.4 million at December 31, 2005. Loans receivable are comprised of installment contracts and mortgages collateralized by manufactured houses and in some instances real estate.

     New loan originations for the three months ended June 30, 2006 increased 10.5% to $76.8 million compared to $69.5 million for the three months ended June 30, 2005. We additionally processed $16.9 million and $10.5 million in loans originated under third-party origination agreements for the three months ended June 30, 2006 and 2005, respectively. These increases were due primarily to increased market share resulting from our focus on customer service and the use of technology to deliver our products and services.

     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):

		June 30, 2006				December 31, 2005
Principal balance of loans receivable		$	866,171			$	781,650
Number of loans receivable			18,687				17,277
Average loan balance		$	46			$	45
Weighted average loan coupon1			9.52	%			9.56	%
Weighted average initial term		20 years				20 years

     Delinquency statistics for the manufactured housing loan portfolio are as follows (dollars in thousands):

		June 30, 2006												December 31, 2005
		No. of				Principal				% of				No. of				Principal				% of
Days delinquent		Loans				Balance				Portfolio				Loans				Balance				Portfolio
31-60			210			$	8,386				1.0	%			215			$	8,182				1.0	%
61-90			73				2,504				0.3	%			68				2,561				0.3	%
Greater than 90			118				4,725				0.5	%			192				7,480				1.0	%

     We define non-performing loans as those loans that are 90 or more days delinquent in contractual principal payments. For the three and six months ended June 30, 2006 the average outstanding principal balance of non-performing loans was approximately $5.4 million and $6.1 million, respectively, compared to $6.5 million and $6.9 million for the three and six months ended June 30, 2005. Non-performing loans as a percentage of average loans receivable decreased to 0.6% and 0.6% for the three and six months ended June 30, 2006 as compared to 1.0% and 1.1% for the three and six months ended June 30, 2005, primarily as a result of higher average balances offset by improved credit quality in the loan portfolio.

     At June 30, 2006 we held 132 repossessed houses owned by us compared to 162 houses at December 31, 2005. The book value of these houses, including repossession expenses, based on the lower of cost or market value was approximately $2.9 million at June 30, 2006 compared to $3.5 million at December 31, 2005, a decrease of $0.6 million or 17.1%.

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

     The allowance for credit losses decreased $1.2 million to $8.8 million at June 30, 2006 from $10.0 million at December 31, 2005. Despite the 12.0% increase in the gross loans receivable balance, net of loans accounted for under the provisions of the American Institute of Certified Public Accountants (“AICPA”) Statement of Position 03-3 (“SOP 03-3”), “Accounting for Certain Loans or Debt Securities Acquired in a Transfer,” the allowance for credit losses decreased 12.0% due to improvements in delinquency rates and net charge-offs. Loans delinquent over 60 days decreased $2.8 million or 28.0% from $10.0 million at December 31, 2005 to $7.2 million at June 30, 2006. The allowance for credit losses as a percentage of gross loans receivable, net of loans accounted for under SOP 03-3, was approximately 1.06% at June 30, 2006 compared to approximately 1.35% at December 31, 2005. Net charge-offs were $2.1 million and $4.6 million for the three and six months ended June 30, 2006, respectively, compared to $2.1 million and $5.2 million for the three and six months ended June 30, 2005.

     Our allowance for credit losses includes amounts provided for inherent losses resulting from the damage inflicted by Hurricane Katrina and Hurricane Rita in 2005. Observed trends in the performance of the identified loans through June 30, 2006 and continuing through August 1, 2006, have been somewhat more favorable than management’s initial expectations, however, there can be no assurance that these trends will continue. At January 1, 2006 our allowance included approximately $3.4 million of estimated losses related to the effects of Hurricane Katrina and Hurricane Rita. As a result of the more favorable trends, we have reduced a portion of the allowance initially established for estimated hurricane losses by approximately $960,000 during the six months ended June 30, 2006. We will continue to gather and interpret data from the affected areas and compare such information to our estimates. Amounts are refined as deemed appropriate.

     Changes to our underwriting practices, processes, credit scoring models, systems and servicing techniques in 2002 have resulted in demonstrably superior performance by loans originated in and subsequent to 2002 as compared to loans originated by our predecessors prior to 2002. The pre-2002 loans, despite representing a diminishing percentage of our owned loan portfolio, have had a disproportionate impact on our financial performance.

The following tables indicate the impact of such legacy loans:

Loan Pool Unpaid Principal Balance (dollars in thousands)¹

						2002 and
		2001 and prior				subsequent
At December 31, 2005
Dollars		$	56,622			$	732,033
Percentage of total			7.2	%			92.8	%
At June 30, 2006
Dollars		$	51,059			$	822,656
Percentage of total			5.8	%			94.2	%