Thornburg Mortgage plunges on bankruptcy worry
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mortgage lenders, Thornburg Mortgage March 5th, 2008EW YORK, March 3 (Reuters) - Thornburg Mortgage Inc on Monday said it has suffered $270 million of new margin calls and failed to meet many of them, raising speculation the lender might file for bankruptcy.
Shares of the specialist in “jumbo” adjustable-rate home loans fell $4.91, or 55.2 percent, to $3.99 in morning trading.
Thornburg said the demands to post more collateral have occurred since Feb 27, and were on top of more than $300 million of margin calls it had met in the prior two weeks.
The Santa Fe, New Mexico-based company said it could not meet a “substantial majority” of the newer calls because of “limited available liquidity.” It said it is in talks with a lender that declared an event of default after Thornburg failed to meet a $28 million margin call.
“Thornburg will have to sell assets in a distressed market or raise equity capital to meet margin calls,” wrote Donald Fandetti, an analyst at Citigroup Global Markets. “Failure to complete either of these two could put Thornburg at risk of bankruptcy.”
Fandetti downgraded Thornburg to “sell” from “hold.” Credit Suisse analyst Moshe Orenbuch downgraded it to “underperform” from “neutral.”
Thornburg did not immediately return requests for comment.
Tags: mortgage lenders, Thornburg Mortgage
