Thornburg Mortgage Loses $3.31 Billion

Thornburg Mortgage, a specialist in jumbo home loans that nearly went bankrupt in March, on Thursday posted a $3.31 billion first-quarter loss as the value of mortgages and other securities it owns plummeted.

The company said its net loss before preferred stock dividends totaled $20.64 per share, and compared with a year-earlier profit of $75 million, or 62 cents per share.

Thornburg had warned in May that it expected to report a substantial quarterly loss. Analysts on average expected a loss of $3.32 per share, according to Reuters Estimates. Results were delayed while Thornburg completed its accounting.

Based in Santa Fe, New Mexico, Thornburg specializes in large mortgages that typically go to buyers of more expensive homes who have good credit. It proved vulnerable to tighter credit markets as investors stopped buying those home loans.

Thornburg also suffered from demands for more collateral from its own lenders.

Chief Executive Larry Goldstone in a statement said he expects delinquencies to increase modestly over the rest of the year but that the credit quality of Thornburg's loan portfolio remains high. He said the lender's primary focus in coming months will be to complete a tender offer for its preferred stock.

Results included a $1.54 billion write-down of the value of mortgage-backed securities and securitized loans Thornburg owns.

The company also realized a $651.6 million loss on the sale of some adjustable-rate mortgages, and had an unrealized $126.1 million loss on a separate adjustable-rate mortgage transaction.

Thornburg also took $949.1 million of charges related to raising $1.35 billion at the end of March from investors including MatlinPatterson Global Advisers, which invests in distressed companies.

This capital-raising helped Thornburg avoid bankruptcy and a possible liquidation but highly diluted existing shareholdings.

Thornburg said it made $548.7 million of loans in the first quarter, despite temporarily halting lending to preserve capital. It said it has made $239 million of loans this quarter. Assets totaled $30.8 billion at the end of March, Thornburg said.

Neither Thornburg nor MatlinPatterson immediately returned requests for comment.

In April, Thornburg also disclosed it was cooperating with a U.S. Securities and Exchange Commission probe into its restatement of 2007 financial results, margin calls from lenders, and its accounting for mortgage-backed securities.

Thornburg shares closed Wednesday at 72 cents, according to New York Stock Exchange data. Their 52-week high is $27.80, set last June 20.

Copyright 2008 Reuters. Click for restrictions.