QUOTE AND NEWS
Insurance Journal  Jul 27  Comment 
Barnes & Thornburg LLP has added David Wood and Joshua Rosenberg to the firm’s litigation department and insurance recovery and counseling practice group. The firm also added John Corbett, of counsel, in Dallas, Texas. The trio arrives from...
MedPage Today  Jun 8  Comment 
(MedPage Today) -- Loralei Thornburg, MD, on keeping mom and baby healthy
Reuters  Apr 25  Comment 
* Teradata corp says entered into an asset purchase agreement with TMA Solutions, L.P
The Hindu Business Line  Nov 17  Comment 
Indian Institution of Industrial Engineering (IIIE) and Trivandrum Management Association (TMA) jointly organised here a two-day workshop on ‘Art and skill of writing project reports and publicati...
Benzinga  Nov 8  Comment 
Alexion Pharmaceuticals, Inc. (NASDAQ: ALXN) today announced that researchers presented new data from a long-term follow-up study evaluating the effectiveness and safety of Soliris® (eculizumab) in preventing thrombotic...
Wall Street Journal  Aug 29  Comment 
A federal judge found that Royal Bank of Canada shortchanged the failed mortgage lender when it seized and subsequently sold some of its assets.
Mondo Visione  Jul 13  Comment 
Thomson Reuters, the world’s leading source of intelligent information for businesses and professionals, announced today it has been appointed by the Hong Kong Treasury Markets Association (TMA) as the calculating agent for the TMA RMB Bond...
The Hindu Business Line  Dec 24  Comment 
Bangalore-based TMA Hospitality Services Pvt. Ltd plans to double the number of outlets of its brand Ammi’s Biryani in the next 12 months. “We have 75 outlets today and will take this to...
Benzinga  Nov 19  Comment 
 Omeros Corporation (NASDAQ: OMER) today announced positive data using OMS721, the lead human monoclonal antibody for its mannan-binding lectin-associated serine protease-2 (MASP-2) program, to inhibit thrombus formation in an ex vivo...




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Thornburg Mortgage (TMA) is a residential mortgage lender that originates, acquires, and makes investments in ARM (adjustable-rate mortgage) assets. The company elects to be treated as a REIT (Real Estate Investment Trust) for federal income tax purposes. The company's ARM assets consist of purchased ARM assets and ARM loans. Purchased ARM assets are mortgage-backed securities that represent interests in pools of ARM loans. The company's ARM loans are either loans that were originated by TMA, loans used as collateral to support the issuance of CDO's (collateralized debt obligations) or loans pending securitization. The company finances its loan purchases and originations through various sources including equity issuance, unsecured debt, CDO's and short term borrowings. When the company borrows short-term funds, they generally enter into interest hedging transactions to mitigate the impact of fluctuations in short-term rates.

Thornburg, which caters to borrowers with strong credit, specializes in "jumbo" mortgages - loans that exceed $417,000. It avoids subprime loans, generally. Until Feb 2008, Thornburg’s loans were too big to be purchased by Federal National Mortgage Association (FNM) and Freddie Mac (FRE).

The company originates its mortgage loans through 313 correspondent lenders and directly to consumers in all 50 states. The company also has 18 field executives and 541 brokerage firms to facilitate its wholesale business. TMA outsources most of its standardized origination functions, loan processing, closing, and servicing, to third-party providers. As a result, the company does not have a nationwide branch network.

Business Financials

The company makes money from the net spread, or the difference between income from interest on ARM assets and the cost of borrowings. As of September 30, 2007, the company had total assets of $36.3 billion, short-term borrowings in the form of commercial paper, reverse repurchase agreements and whole loan financing of $12.2 billion, and permanent mortgage debt, in collaterals, of $21.1 billion. The company concentrates it business on larger balance high credit loans, which decreases default risk. As of September 30, 2007, the company's portfolio consisted of 94.8% AAA-rated assets and 5.2% below AAA-rated assets.

Subprime Crisis

Thornburg Mortgage Inc. (TMA) said on 25th March 2008 that it would raise $1.35 billion through a private-placement deal to help keep the company in business and avoid bankruptcy. It avoided subprime loans, which have had the highest rates of default, but ran short on cash after falling home sales reduced demand and investors wary of mortgage-backed assets retreated from the company’s securities.

Thornburg has lost 95% of its value in the past year, and is desperately fighting to stay afloat. It needs approximately $1 billion this week to meet margin calls from bankers. A previous plan to raise about $1 billion in convertible notes with an interest rate of 12% failed and was subsequently terminated.

Having suspended its preferred dividends and offered to buy back 90% of its preferred stock, Thornburg is now seeking to raise $1.35 billion using debt that pays an 18% interest rate. If the New York Stock Exchange grants its approval, Thornburg will issue senior subordinated secured notes due in 2015 without shareholder approval, which the company says would take too long.

An infusion of fresh capital is the centerpiece of a recent agreement Thornburg struck with its creditors, who agreed to freeze their demands for more collateral, so long as the company can raise at least $948 million in seven business days. If this offer fails, and the company’s creditors withdraw from the agreement, Thornburg will likely be forced into bankruptcy.

References

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