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Thornburg Raises Cash

It says a debt financing allows it to reduce warehouse borrowings.
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Thornburg Mortgage


raised $1.4 billion in a collateralized mortgage debt transaction.

The Santa Fe, N.M., jumbo mortgage lender said the financing is collateralized by $1.44 billion of the company's prime hybrid adjustable rate mortgage loans in the publicly registered Thornburg Mortgage Securities Trust 2007-4. The company first announced the possibility of this transaction on Thursday and it was completed on Friday. Proceeds were used to reduce the company's borrowings under its ARM loan warehouse financing lines by $1.37 billion.

The news comes as Thornburg and other big mortgage companies, notably

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, seek alternatives to the dried-up markets for mortgage securities. The companies have in recent years originated loans with the intent of selling them into the secondary markets, but those markets have collapsed under the weight of defaults and delinquencies on recent-vintage loans to homebuyers with poor credit histories.

Last week, Thornburg Mortgage said it resumed funding existing loans in its pipeline after a moratorium tied to the company's need to line up outside financing. Thornburg also took the unusual step last week of selling $500 million worth of preferred stock yielding at least 10%.

Thornburg said the collateralized mortgage deal gives it additional warehouse capacity, meaning it is "positioned to continue increasing the pace of its mortgage loan funding."