Today Thornburg Mortgage (TMA) filed reports stating they had met $300 million of margin calls on approximately $3 billion of their mortgage portfolio. The financial news services wasted no time getting out their Thesauri for snappy headlines (via Yahoo Finance):
- Hit - Wall Street Journal - a little lame.
- Thwacked - Forbes - now that’s a little better.
- Mangle - Fortune - better or worse than thwacked?
- Socked - Fortune again - above was the link, this is the headline.
- Tumbles - MarketWatch - friendlier.
- Woes - CNNMoney - not a verb, but always handy.
- Bad to Worse - Barrons - piling on.
Thornburg had to meet margin calls earlier this month on mortgage securities that are performing well, but the market price of the securities had declined. It appears TMA has used up the majority of their ready cash to meet the requirements. If prices do not fall further, they will be OK. If not, securities will have to be sold.
Thornburg has an excellent history of buying and underwriting superior quality mortgages. It is discouraging to see the fear factor in the mortgage market have such a severe effect on a company that has really stayed away from the sub-prime side of the market. Somewhere along the line someone is going to show huge profits from buying distressed, high-quality mortgage securities during these dark days.
Disclosure: I am long TMA.