Thornburg Mortgage Says Loss Widens; Shares Fall


Thornburg Mortgage, a jumbo-mortgage lender pinched by the credit crisis, Tuesday boosted its estimated loss from asset sales by 27 percent as trade data revealed lower prices.

Thornburg shares dropped 8 percent to $12.39 per share in New York trading after the announcement of the revision, which will boost the hit to third-quarter earnings to $1.1 billion.

The estimated loss is the second revision announced by Santa Fe, New Mexico-based Thornburg since it sold $20.4 billion of top-rated mortgage securities in August due to sharp pull-backs in financing by investors in mortgages and mortgage companies.

The latest revision illustrates the difficulty in valuing bonds in a tumultuous market where investors have been rapidly reassessing risks and information on similar trades has been spotty or nonexistent.

The revision came as the company received "actual sale price documentation" for the asset sales, Thornburg said in a statement. It also said an unrealized portfolio loss will grow to $286 million from the $262 million anticipated in mid-August based on revised market value prices.

"The decreased market value is a reflection of the widening of risk premiums and lack of liquidity in all but the AAA rated segment of the mortgage securities market," and not credit losses, the company said in a statement.

The company said it sold $22 billion of high-quality adjustable-rate mortgages since Aug. 10, up from the $20.4 billion first announced.

Thornburg's loans are considered high-quality jumbo loans, which are above the $417,000 level that limits purchases by giant mortgage finance companies Fannie Mae and Freddie Mac.

Loans above the "conforming" size have largely been sold into the so-called "private label" mortgage-backed securities market that has been rocked this year by soaring delinquencies and losses on risky subprime debt.