Thornburg Mortgage Faces SEC, NYSE Probes

April 29, 2008 No Comments »


Thornburg Mortgage revealed late yesterday that it received notice of an SEC probe related to the company’s margin call fiasco that pushed it to the brink of bankruptcy a month ago.

The Santa Fe, New Mexico-based mortgage lender said it received a letter dated April 4 from the agency regarding the investigation, which corresponds to the company’s restatement of earnings for fiscal year 2007.

More specifically, it focuses on the accounting methods used to revalue the company’s mortgage-backed securities and disclosures related to its real and threatened margin calls.

The notice from the SEC said it had not determined if any violations of securities laws actually took place.

Separately, Thornburg disclosed that on March 6, the company received a notice from the NYSE that it was reviewing transactions in the company’s common stock prior to a disclosure in early January regarding the impact of recent market events in the mortgage industry on its book value.”

Earlier this year, Thornburg Mortgage faced a series of dramatic margin calls from its lenders, forcing the company to raise $1.35 billion via a private placement of senior subordinated secured notes and warrants that severely diluted its shares.

After two nail-biting extensions, the company was able to repay its lenders, although it’s unclear if Thornburg actually resumed lending and what its outlook was going forward.

The company specializes in jumbo mortgages and adjustable-rate mortgages for borrowers with pristine credit.

Shares of Thornburg were off three cents, or 2.33%, to $1.26 in midday trading on Wall Street.

(photo: jankroemer)

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