Thornburg Mortgage Bankruptcy Expected

April 1, 2009 No Comments »


Well, it’s looks like I can finally stop writing about Thornburg Mortgage, as the end appears to be here.

The embattled mortgage lender announced today, after a very long struggle with its financing counterparties, that it will sell its remaining assets and discontinue operations.

The counterparties, which include big banks like Credit Suisse, Chase, and UBS, to name but a few, have granted the company additional forbearance for payments on various financing agreements through April 30.

“In exchange for the continued forbearance the Company has agreed that the remaining Counterparties who have not previously taken possession of their collateral under their respective financing agreements may do so at the Counterparty’s discretion and that the price of such collateral will be determined on a date chosen by the Counterparty,” Thornburg said in a statement.

Thornburg will hand over mortgage servicing rights to the Counterparties and commence an “orderly sale or liquidation” of remaining assets with the assistance of Houlihan Lokey Howard & Zukin Capital, Inc.

The company expects to file for Chapter 11 bankruptcy protection and discontinue operations once liquidation is complete, though it’s unclear to what degree they have been operating or how many employees will be affected.

The Santa Fe, New Mexico-based mortgage lender used to provide jumbo and super jumbo adjustable-rate mortgages to the most creditworthy borrowers before margin calls brought the company to its knees.

While their mortgages were not inherently bad (you could actually argue they were of good quality), the fire sale of related Alt-A mortgage securities by competing banks cut the value of their own holdings severely, sending the company into a tailspin.

Shares of Thornburg Mortgage fell four cents, or 70 percent, to just one penny in early morning trading on Wall Street.

Update: Thornburg cut much of its remaining staff, though it’s unclear how many still worked for the company.

(photo: minid)

Leave A Response