Writedown Thumps Thornburg

Updated from 10:32 a.m. EDT

Thornburg Mortgage(TMA Quote) slumped as much as 11% after the jumbo mortgage lender revealed that losses taken on loan sales in the third quarter would be wider than expected.

Thornburg said Tuesday that it ended up selling $22 billion worth of high quality adjustable-rate mortgage assets since early August. It expects to post a loss of $1.1 billion on the asset sales.

The Santa Fe, N.M.-based lender had originally expected to sell about $20.4 billion worth of high quality ARMs and to take a loss of $863 million.

The expanded losses are primarily due "to the receipt of actual sale price documentation for asset liquidations conducted by third-party financing counterparties as opposed to those sales conducted by the company," Thornburg said.

Thornburg also said that it would record a $286 million loss on the value of its mortgage securities portfolio, up from $262 million that was originally estimated. It had a $6 million impairment charge on one mortgage-backed security backed by pay option ARMs.

It expects to report a $16 million loss on mortgage loans funded during the third quarter.

"The global dislocation of the mortgage finance and credit markets this past summer has had a greater impact on our balance sheet than we initially estimated," said Larry Goldstone, president and COO of Thornburg Mortgage. "However, we have begun to see a modest improvement in financing conditions since August. Despite the greater than previously reported losses, we believe we have adequate liquidity to support our current borrowings portfolio and excess capital to continue to fund new loans and to opportunistically purchase and finance other high-quality mortgage assets, provided market conditions do not deteriorate further."