Thornburg Mortgage Shares Up on Analyst Note

November 14, 2007 No Comments »

Shares of Thornburg moved higher after a Friedman Billings Ramsey analyst released a report claiming the mortgage lender was due to benefit once the industry recovers.

The Santa Fe, New Mexico-based lender, which specializes in jumbo adjustable-rate mortgages, saw its shares rise 77 cents, or 8.09%, to end the day at $10.29.

Friedman Billings Ramsey analyst Paul J. Miller Jr. said Thornburg’s credit quality remains spotless, with the average credit score in the lender’s portfolio coming in at a solid 744.

The analyst also noted that most of the loans originated by Thornburg are tied to borrowers with strong income, unlike many lenders who financed deals with no income verification (no doc loans, stated income loans).

Miller reiterated an “Outperform” rating on the stock and kept his price target at $13.

Thornburg has shed more than 60 percent of its value this year, hitting a low of $7.49 in August, its lowest share price since the year 2000, after facing margin calls, multiple analyst downgrades, and subsequent bankruptcy fears.

Back in August, the lender sold $20.5 billion of high-quality mortgage-backed debt to boost liquidity and halted new lock-in requests thanks to “unprecedented and irrational sentiment in the secondary mortgage market”.

Interestingly, the Thornburg Mortgage website now clearly states, “We are a Portfolio Lender, we will not sell your loan.”

The slogan is likely in response to the many borrower complaints that arise when mortgages change hands, confusing and angering homeowners in the process.

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