Jumbo Lender Thornburg Mortgage Calls it Quits
Jumbo mortgage specialist firm Thornburg Mortgage Inc., said today it plans to file for bankruptcy protection and shut down. Remaining assets will be sold or liquidated to pay bondholders and creditors, according to a statement today from the Santa Fe, New Mexico-based company.
Ironically, Thornburg’s loan portfolio of mortgages over $417,000 had little subprime exposure and the company’s mortgage holders were doing a good job of staying currnet on their loans. What killed the company was a lack of new jumbo loan production and a credit squeeze of its own. The company started running short of cash in August 2007 as foreclosures nationwide headed toward new highs and investors became leery of assets backed by home loans. A bailout in March 2008 from buyout firm MatlinPatterson Global Advisers LLC failed to revive the company as lenders demanded payments to cover the plunging value of mortgage assets.
Thornburg’s lenders including JPMorgan Chase & Co. and Credit Suisse Group AG can take possession of their collateral and use proceeds to reduce the company’s debt, Thornburg said. Thornburg had $7.3 billion of mortgage-backed securities and owed its lenders $4.7 billion against those assets, according to company presentations. Thornburg today also agreed to transfer its mortgage-servicing rights to the investment firms.
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