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Margin Calls Prick Thornburg

The jumbo loan specialist could have to free up cash to put up as collateral for its plummeting Alt-A portfolio.

Thornburg Mortgage


shares were plunging Thursday on news that the mortgage originator may be forced to sell assets in order to meet collateral requirements by its lenders.

The Santa Fe, N.M.-based company said that it has so far met $300 million in so-called margin calls since Feb. 14, and may be required to post more cash as its portfolio of Alt-A loans has fallen some 10% to 15% in value over the past few months.

Alt-A mortgages are unconventional, nonprime mortgages that are provided to borrowers with insufficient documentation to prove their income.

Thornburg maintains a portfolio of some $2.9 billion in Alt-A mortgages. The lender described the drop in the value of those loans in a regulatory filing with the

Securities and Exchange Commission

as a "sudden adverse change in mortgage market conditions in general" that began on Feb. 14.

Shares of the company were down as much as 22% in Thursday trading action, after seeing values plunge as much as 28% in premarket trading. More recently, shares were off 18.3% to $9.43.

A call to Thornburg founder and CEO Larry Goldstone was not immediately returned.

Thornburg faced similar calls for additional capital to meet lender requirements during the summer when the mortgage crisis began to upend Wall Street firms and traditional mortgage lenders. Back in August, the mortgage originator sold $21.9 billion of assets to appease lenders and raised $500 million a month later to shore up its balance sheet.

The West Coast mortgage lender specializes primarily in providing adjustable-rate mortgages known as jumbo loans, which are typically $417,000 or more.