Thornburg Mortgage says loss widens; shares fall

By Al Yoon

NEW YORK (Reuters) - Thornburg Mortgage Inc, a jumbo-mortgage lender pinched by the credit crisis, on Tuesday boosted its estimated loss from asset sales by 27 percent as trade data revealed lower prices than expected.

Thornburg shares dropped 8.7 percent to $12.29 per share in New York trading after the announcement of the revision, which will boost the hit to third-quarter earnings to $1.1 billion. The stock is down more than 50 percent since July.

The estimated loss is the second revision announced by Santa Fe, New Mexico-based Thornburg since it sold $20.4 billion of top-rated mortgage securities in August due to sharp pullbacks in financing by investors in mortgages and mortgage companies.

The revision illustrates the difficulty in valuing bonds in a tumultuous market where investors have been rapidly reassessing risks and information on similar trades has been spotty or nonexistent.

The revision came as the company received "actual sale price documentation" for the asset sales, Thornburg said in a statement. It also said an unrealized portfolio loss will grow to $286 million from the $262 million anticipated in mid-August based on revised market value prices, and estimated a $16 million loss on loans approved before jumbo rates rose to match rising funding costs.

"The global dislocation of the mortgage finance and credit markets this past summer has had a greater impact on our balance sheet than we initially estimated," Larry Goldstone, Thornburg's chief operating officer, said in the statement. The previous estimates of asset sale losses were based on the best information available to the company at the time, he added.

The company said it sold $22 billion of high-quality adjustable-rate mortgages since August 10, up from the $20.4 billion first announced.

Thornburg's loans are considered high-quality jumbo loans, which are above the $417,000 level that limits purchases by giant mortgage finance companies Fannie Mae and Freddie Mac.

Loans above the "conforming" size have largely been sold into the so-called "private label" mortgage-backed securities market that has been rocked this year by soaring delinquencies and losses on risky subprime debt. Thornburg's jumbo segment has been affected by the investor pullback on credit even as delinquencies on loans in its portfolio remain low.

Decreased market value of securities held in Thornburg's portfolio are due to higher risk premiums demanded by investors and lower liquidity, not credit losses, the company said. Financing conditions have begun to improve, Goldstone said.

(Additional reporting by Dilipp S. Nag in Bangalore, Lilla Zuill and Chris Sanders in New York)