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Thornburg Restates Financials, In Discussions to Meet Margin Calls


Thornburg Mortgage said today that it filed its amended financial statement with the SEC and was in discussions with its lenders to meet all outstanding margin calls in a timely manner.

The company’s amended form 10-K/A now accounts for the impairment charge of $427.8 million and an additional $248.8 million which it said reflects its potential inability to hold onto said securities until maturity.

Thornburg said the restatement of its financial statements was the result of “adverse developments” in the mortgage and credit markets since last August, resulting in the deterioration of prices for mortgage-backed securities.

But the Santa Fe-based jumbo mortgage lender was quick to note that the credit quality of its loan portfolio was top notch, with just a 0.44% 60-plus day delinquency and REO rate as of December 31, far below the 4.23% industry average as of September 30, and a rating equivalent to AAA or AA on 97% of its mortgage portfolio.

Thornburg believes the unrealized losses are not reflective of credit deterioration within its mortgage holdings and that the restatement of its financials will not have a material impact on the company’s book value, but rather will improve the company’s yield and benefit GAAP income going forward.

Most importantly, CEO Larry Goldstone addressed the outstanding margin calls, and said his company was in talks to resolve them while minimizing the sale of high-quality assets at a steep loss.

“Similar to many companies impacted by the current crisis in the mortgage finance industry, our immediate challenge is meeting margin calls from our lenders that has been brought on by the dramatic decline in high quality mortgage-backed securities prices,” said Goldstone.

“While we aggressively pursue more permanent solutions to our liquidity issues, we are in discussions with our lenders to reach a mutually satisfactory agreement that will enable us to meet all of our outstanding margin calls within an acceptable timeframe for our lenders and also mitigate the sale of high-quality assets at a significant loss in this environment.”

“While these challenges are unprecedented, we are making every effort to manage through this situation so that we may resume our business as a leading super-prime lender in the jumbo mortgage sector.”

Shares of Thornburg skyrocketed 89 cents, or 125.35%, to $1.60 on the news.

(photo: sethw)

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