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Thursday, June 12, 2008

Thornburg Reports $3.31 Billion 1st Quarter Loss


Associated Press
      SANTA FE — Thornburg Mortgage Inc. said today it swung to a $3.31 billion loss in the first quarter, and expects loan delinquencies to continue to increase "modestly" for the rest of the year.
    Before paying preferred dividends, the Santa Fe-based mortgage lender lost $3.31 billion, or $20.64 per share, for the quarter that ended March 31, compared with profit of $75 million, or 62 cents per share, a year ago.
    Thornburg specializes in larger mortgages, known as "jumbo loans," which total more than $417,000. The company said the value of securities it owns dropped drastically during the quarter amid a slowing economy and continued housing slump, forcing it to take market value losses of $1.54 billion.
    Thornburg also recorded $949.1 million worth of charges related to financing.
    Amid a continued decline in housing prices, a lack of trading activity in the skittish mortgage securities market, a capital-light banking sector and continued rating agency downgrades of mortgage-backed securities, Thornburg faced margin calls of about $1.8 billion in the first two months of the year.
    By March 6, the company paid out $1.2 billion of those calls, but didn't have enough cash to pay back the remaining $610 million, forcing it to sell some of its portfolio and seek alternative financing.
    The company later raised $1.35 billion in capital.
    "Despite the continued modest increase in loan delinquencies in the first quarter of 2008 and our expectation that delinquencies are likely to continue to increase modestly over the balance of the year, the credit quality of our originated and acquired loan portfolio continues to perform extremely well, and their performance is consistent with our current estimates," said Larry Goldstone, chief executive and president of Thornburg.
    Shares fell 7 percent, or 5 cents, to 67 cents in premarket trading.

Copyright ©2008 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

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