Thornburg Mortgage posts $3.31 billion loss

BANGALORE (Reuters) - Thornburg Mortgage Inc TMA.N, a specialist in jumbo home loans that nearly went bankrupt in March, posted a $3.31 billion first-quarter loss on Thursday as the value of mortgages and other securities it owns plummeted.

A foreclosed home surrounded by overgrown grass in Stockton, California, May 13, 2008. REUTERS/Robert Galbraith

The company said its net loss before preferred stock dividends totaled $20.64 per share, and compared with a year-earlier profit of $75 million, or 62 cents per share.

Thornburg had warned in May that it expected to report a substantial quarterly loss. Analysts, on average, expected a loss of $3.32 per share, according to Reuters Estimates. Results were delayed while Thornburg completed its accounting.

Based in Santa Fe, New Mexico, Thornburg specializes in large mortgages that typically go to buyers of more expensive homes who have good credit.

It proved vulnerable to tighter credit markets as investors stopped buying those home loans. Thornburg also suffered from demands for more collateral from its own lenders.

On a conference call, Chief Executive Larry Goldstone said Thornburg would likely not have survived had it not at the end of March obtained a $1.35 billion capital infusion from investors including MatlinPatterson Global Advisers LLC, which invests in distressed companies.

He said Thornburg’s primary focus in coming months will be to complete a tender offer for its preferred stock, perhaps by the end of August. Goldstone also said Thornburg has not completed its financial statements, but expects to file them with its quarterly report as soon as early next week.


“It has been an extraordinarily difficult and arduous and complicated process to get to this point,” he said on a conference call. Goldstone said the market for mortgage securities remains “dysfunctional.”

Results included a $1.54 billion write-down of the value of mortgage-backed securities and securitized loans Thornburg owns.

The company also realized a $651.6 million loss on the sale of some adjustable-rate mortgages, and had an unrealized $126.1 million loss on a separate adjustable-rate mortgage transaction.

Thornburg also took $949.1 million of charges related to the capital-raising, which heavily diluted existing shareholders.

The company said it made $548.7 million of loans in the first quarter. It said it has since made $239 million, but Goldstone said these were already in its pipeline, and that “we’re not really originating any of the new loans right this minute.”

Assets totaled $30.8 billion as of March 31, Thornburg said.

Goldstone in a statement said he expects delinquencies to increase modestly over the rest of the year but that the credit quality of Thornburg’s loan portfolio remains high.

Neither Thornburg nor MatlinPatterson were immediately available for further comment.

In April, Thornburg disclosed it was cooperating with a U.S. Securities and Exchange Commission probe into its restatement of 2007 financial results, margin calls from lenders, and its accounting for mortgage-backed securities.

Thornburg shares fell 1 cent to 71 cents in morning trading, according to New York Stock Exchange data. Their 52-week high is $27.80, set last June 20.

Editing by Brian Moss and Derek Caney