Mortgage Informer

NEW YORK -

Shares of Thornburg Mortgage Inc. plummeted 63.1 percent Thursday, a day after the mortgage lender said its future is still up in the air even after reaching a deal months ago to raise new capital.

Thornburg shares fell 41 cents to 24 cents in afternoon trading. Earlier in the session, they fell as low as 22 cents.

Thornburg must still complete a tender offer to repurchase at least 90 percent of outstanding preferred stock as part of the deal to receive the new investment from a group led by MatlinPatterson, according to a filing with the Securities and Exchange Commission.

The mortgage lender is offering preferred shareholders $5 in cash plus about 3.5 shares of common stock for every $25 in preferred stock.

Thornburg – which specializes in originating and investing in jumbo mortgages that are worth more than $417,000 – has been struggling since the middle of 2007 amid the downturn in the real estate market and a spike in mortgage defaults.

Last week, Thornburg said it lost $3.31 billion during the first quarter.

In early March, Thornburg disclosed it has faced nearly $1.8 billion in margin calls since the beginning of the year. Thornburg faced a similar round of margin calls in August but was able to meet them.

As delinquencies and defaults among certain types of mortgages have risen, investors have shied away from purchasing nearly all types of loans in the secondary market.

The thin market for debt backed by mortgages has caused prices to plummet. As those prices fell, companies like Thornburg have been forced to reduce the value of their holdings, regardless of actual performance. Those declining prices also have banks making margin calls – which require companies to put up more collateral for financing lines of credit.

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Tags: Mortgage