Thornburg Loses $930 Million in Debt Fire Sale

Residential mortgage lender Thornburg Mortgage Inc. announced Monday it sold $20.5 billion of high-quality mortgage-backed debt, totaling 35% of its assets, at a discount to pay down debt it could not refinance. President Larry Goldstone said the company will post a $930 million dollar loss on the sale, probably resulting in a net loss for the year. The securities sold for about 95 cents on the dollar according to Goldstone. Thornburg, which specialized in "jumbo" loans of at least $417,000 with good credit, hopes to resume normal operations over the next two weeks after it was forced to stop accepting loan applications as a result of a lack of funds last week (see full summary). Jefferies Group Inc. analyst Richard Shane Jr. commented on the situation, saying that while Thornburg "appears likely to survive its liquidity crisis, we believe future earnings power has been materially damaged." Shares of Thornburg traded -$1.54 (-10.5%) to $13.47 at 1:04 PM Monday.

Sources: Wall Street Journal, TheStreet.com, AP, Reuters, Bloomberg
Commentary: Thornburg Mortgage Hit With Margin Calls; Shares Plunge 47% • The Long Case for Thornburg Mortgage • Profitable Independent Lenders: Next Victims of the Credit Crunch?
Stocks/ETFs to watch: TMA. Competitors: WFC, BAC, FRE, FNM

Seeking Alpha's news briefs are combined into a pre-market summary called Wall Street Breakfast. Get Wall Street Breakfast by email -- it's free and takes only seconds to sign up.