cromag

Let Thornburg's Demise Be a Lesson to You

I originate mortgages through Thornburg.

They need to keep originating to make profits.

They do this with a warehouse line, sort of (ultra simple explanation) like the way you can use your home equity line. They originate as many as possible in a month and then repackage them and sell them to an investor for a profit, cash-in-hand. This then clears their line to do all over again.

The loans they sell are good jumbo loans to strong borrowers who would not likely default because they are higher net worth clients.

This is a very simple explanation for how it works. I'm leaving a lot out because the point is they need to originate loans so they may repackage and sell them to investors such as pension funds etc. This is what they do every month to make a profit.

They are not a middleman. LOL They even service the loans they choose. In addition they have a niche market and customer profile that not many other lenders have or can compete with.

GOLDSTONE: Our funding cost is not based upon the nine-and-a-quarter percent. Our funding cost is based upon the securitization execution we can get in the marketplace; and that’s somewhere in the neighborhood of six percent, give or take a little bit in today’s environment. And, so, consequently, as we clear out our loan pipeline, you’ll begin to see our mortgage rates come back down as we begin to encourage business as opposed to what we’ve been doing over the last month, which has been to discourage business.

Disclosure: Mortgage Broker, Long TMA