Thornburg is just about to close there doors. They will not be able to meet the current or any future margin calls. Major lay-offs on the way.
Considering that this is the same billybob who had Indymac shutting their doors by year-end back in November...I thought it prudent to post at least the pertinent parts of the press release. While there is no admission of "major layoff," there certainly does seem to be a boatload of trouble here...
SANTA FE, N.M.--(BUSINESS WIRE)--March 03, 2008 Thornburg Mortgage, Inc. (NYSE:TMA), today announced that since February 28, 2008, the filing date of its 10-K Annual Report, the company has been subject to additional margin calls of approximately $270 million on its reverse repurchase agreement borrowings outstanding as of February 29, 2008. The Company has not met the majority of its most recent margin calls, but it is working to meet all of its outstanding margin calls within a time frame acceptable to its lenders by either selling portfolio securities or raising additional debt or equity capital. These margin calls are strictly the result of continued deterioration of prices of mortgage-backed securities precipitated by difficult market conditions, but are not a reflection of the credit performance or long-term realizable value of Thornburg Mortgage's high quality portfolio, which continues to remain exceptional.
As of February 27, 2008, Thornburg Mortgage had met all margin calls, including margin calls received between February 14 and February 27, 2008, in an amount in excess of $300 million, on our reverse repurchase agreements, the substantial majority of which were related to the decline in valuations on our super senior mortgage securities backed by Alt-A mortgage loans. The significant majority of those margin calls was triggered because of continued excess supply of similar types of securities into the market. After meeting all of its margin calls as of February 27, 2008, Thornburg Mortgage saw further continued deterioration in the market prices of its high quality, primarily AAA-rated mortgage securities, which triggered additional margin calls. As a result of successfully meeting its margin calls as of February 27, 2008, the company was left with limited available liquidity to meet its current margin calls as well as any future margin calls. There is no assurance as to Thornburg Mortgage's ability to sell such assets or raise additional funds in the current market at acceptable prices, or to raise additional capital. If the Company is unable to satisfy outstanding margin calls, any or all of its reverse repurchase agreement counterparties may declare an event of default and liquidate the pledged securities. Such an occurrence would have a material adverse effect on the Company's ability to continue its business in the current manner. Even if the Company is able to satisfy outstanding margin calls, there is no assurance that the value of its mortgage portfolio and derivative portfolio will not decline further, that it will not experience a further decline in its book value, that lenders will not make additional margin calls, or that it will be able to satisfy additional margin calls, if any. The Company is currently in default with one reverse repurchase agreement counterparty and is working with that lender to repay the debt and the lender has not yet exercised its right to liquidate pledged collateral.
Looks like another firesale of assets for TMA is on the way.
_________________ Michigan is leading the way into the Abyss and looking at YOU for a dance partner. Be Worried!
-------------------------------------------------------
I call it desperation of the worst kind. The clock is ticking. I wish it weren't so, but I can honestly say that I haven't seen a lender yet that can handle three rounds of margin calls. Can they handle four? Absolutely not, so what's the point in trying to stay afloat after this one. This great company is on serious life support. It kills me to say that, but it's true.
I agree, they are toast. The stock was already cut in half once this week, now it's trading another 50% down in after hours trading. It'll fall to probably $1.00 or so in the morning barring adverse news, which could drop it lower.
They can't sell stock to raise this capital; how are they going to get it?
I think they should rob a Chinese bank; there's lots of U.S. Dollars there from all of us mortgage employees that spent our commissions and bonus checks on Chinese made widgets at Wal Mart; maybe they could repatriate some capital that way.
Hey vultures.... go watch family guy or something... maybe have a drink. Why are you here predicting the demise of the source of income for all these people's families.
BillyBob is like the anxious undertaker. He's unplugging the patient and carting him off while the patient is still looking for his insurance card. Thank the Lord BB didn't become a Doctor. But, in his favor, if BB states that every company will go under... eventually he will be right about one of them.
Hey vultures.... go watch family guy or something... maybe have a drink. Why are you here predicting the demise of the source of income for all these people's families.
BillyBob is like the anxious undertaker. He's unplugging the patient and carting him off while the patient is still looking for his insurance card. Thank the Lord BB didn't become a Doctor. But, in his favor, if BB states that every company will go under... eventually he will be right about one of them.
I'm cranky tonight. I need my Kool-Aid
LOL. It's just information texasrep.
Anyway, I'm watching TMA news because I'm sitting on put contracts.
Drink the Kool-Aid. I think Indymac is safe for now.
Texasrep,
I'm sorry that you can't see the truth. Hiding your head in the sand isn't going to make bad news go away. It's bad, it's sad and I'm not glad. They were a great company, but no one has been able to get through three rounds of margin calls with no liquidity. There are no investors at this point willing to pony up the enormous amount of money needed to save this company. At this point, when the Fed says that they are predicting 1 in 4 banks having problems, how do you figure the mortgage servicers are safe? I'm curious. The mortgage banks/servicers get their warehouse money from banks. If Centex, Beezer and now it looks like DR Horton (from what I'm hearing) is looking at closing their mortgage division due to exposure from buybacks, warehouse lending problems, etc., then what makes you think this company can make it?
Texasrep,
I'm sorry that you can't see the truth. Hiding your head in the sand isn't going to make bad news go away. It's bad, it's sad and I'm not glad. They were a great company, but no one has been able to get through three rounds of margin calls with no liquidity. There are no investors at this point willing to pony up the enormous amount of money needed to save this company. At this point, when the Fed says that they are predicting 1 in 4 banks having problems, how do you figure the mortgage servicers are safe? I'm curious. The mortgage banks/servicers get their warehouse money from banks. If Centex, Beezer and now it looks like DR Horton (from what I'm hearing) is looking at closing their mortgage division due to exposure from buybacks, warehouse lending problems, etc., then what makes you think this company can make it?
I hope and pray that the good people who work at TMA dont lose their jobs. Will all that prayer do good? Not likely, but GOD is great. What I take offense to is: the posters on this site dancing around like heathens as they predict with glee the downfall of another company.
While this may be founded (and there is a lot in the news to substantiate it), our industry has become a culture of self-fulfilling prophecy.
Person 1: Company X will close their doors soon. They are in trouble.
Person(s) 2-999: Well, then I won't send them any loans.
3 months later...
Company X: Due to rapidly decreasing volume and our warehouse lines being called we have had to close our doors. This was caused by rumors making brokers and borrowers feel unsafe using Company X and too little volume for our warehouse to justify staying open.
Politicians, lawyers and the media are doing enough to make us look bad. Why don't we focus on originating good loans, helping good borrowers and stop trashing our industry and the companies that we work for?
Why are the builders worried about buyback exposure: Hmmm.. There was no pressure from the builder management to cut corners when Builder Owned Mortgage Companies (BOMC) were originating and underwriting the loans...was there?
As an AE I had multiple builder owned mortgage companies and ABAs as accounts. Rather than let the banks UW the loan, they wished to take the risk themselves as they could close more loans faster. Many of the UW were paid on quanitity not quality--sadly--or they were fired from the BOMC's for being too picky.
Then, what is the additional contingent exposure when the little twits from NY (Spitzer and Cuomo) decide that they want to look at that relationship as well. If I were a builder, even without the buyback exposure, I think that I would shut down my mortgage company before the NY political engine started to use me as campaign fodder. Its very little time before Cuomo figures out a way to justify investigating these companies for RESPA violations b/c they put the stockholders at risk.
Just know that this is a sensitive subject for everyone involved, but if I was a borrower, broker or mortgage lender and I saw Thorn's 8K - you had better believe that I wouldn't close or ATTEMPT to close a loan or sell a loan to them for them to service. It's like asking to be carjacked on the way to the airport to go on your honeymoon. No one wants a delay which could slow down business and create major problems for you down the road. I hope you understand where I'm coming from. It's purely from risk point of view. I know people at Thorn and Horton and as good and honest as they are, it doesn't take much in the way of liquidity or risk problems to bring a company to it's knees. What worked two years ago, doesn't work today, that's the facts. Thorn should have cut their losses 6 months ago and sold more servicing when they were given the chance, but they didn't. They were still taking risks that other companies weren't and they were still spending money they didn't have. How do you stop that? Take out EGO and look at the hard facts of this business (I'm referring to the CEO of Thorn- not you) . There are plenty of mortgage cos. out there that stopped spending money on stupid things and took their lumps by lowering their exposure and risk.
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