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Thornburg Mortgage Reports Billion Dollar Loss

Sante Fe-based Thornburg Mortgage reported a net loss of $1.084 billion, or $8.83 per share in the third quarter, compared to net income of $75.3 million, or 64 cents a share a year ago.

Analysts polled by Thomson Financial expected a per share loss of $7.98 after paying dividends to preferred shareholders.

The jumbo loan lender sold $21.9 billion in loans at a loss of $1.09 billion during the third quarter in an effort to boost liquidity, while posting a loss of $11.5 million to fund forward commitments.

Thornburg’s loan origination totaled $1.3 billion in the third quarter, well below the firm’s target of $2 billion, largely due to a halt in lending over the summer.

The company also mentioned that it needed to obtain additional short-term financing during the quarter to avoid the fire sale of other assets to stay afloat.

The lender isn’t quite out of the woods, as Thornburg president Larry Goldstone told analysts via a conference call today that, “We are concerned about the potential for another mini-liquidity crisis.”

The ailing lender halted its dividend for the third quarter, with Chairman Garrett Thornburg saying, “it is in the best long-term interests of our shareholders to forgo payment of a common dividend for the quarter and to make conserving cash, enhancing liquidity and selectively acquiring new assets our key priorities during the fourth quarter.”

Just two months ago, Thornburg President Larry Goldstone said, “I’m pretty confident we’re going to be able to make that payment.”

It’s the first time the company has missed its dividend payment since it began paying it over a decade ago.

On a bright note, the delinquency rate on Thornburg’s loans rose mildly to 0.27% from 0.23% the previous quarter, well below the industry delinquency rate of 2.81% a quarter ago.

Thornburg is the latest in a string of mortgage lenders to report record losses as the effects of the ongoing mortgage crisis continue to unravel.

Thornburg Mortgage specializes in jumbo, adjustable-rate mortgages to borrowers with good credit, a market that has essentially shriveled out of existence over the last few months.

Shares of Thornburg ended the day down $1.36, or 11.93% to close at $10.04, well below their 52-week high of $28.40.

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