Thornburg Mortgage ( TMA) swung to a monstrous loss of $3.31 billion for the first quarter on the plummeting value of securities tied to home loans and said it expected delinquencies to continue to rise.

The Santa Fe, N.M.-based jumbo loan specialist reported a net loss before paying preferred stock dividends of $20.64 per common share, vs. last year's net income of 62 cents per share. The decline in fair market value of the company's mortgage-backed securities and securitized loan portfolios contributed $1.5 billion to the loss.

A balance sheet and income statement were not included with the quarter's figures, though the CEO and President Larry Goldstone said he expected to file a 10Q with the Securities and Exchange Commission next week. He maintained that most of the negativity of the announcement was due to accounting rules.

"A number of factors that were non-recurring and accounting driven led to the losses," Goldstone said on a conference call. He noted that the recent senior subordinated note transaction was barely in the market before they had to give it a fair market value, which turned out to be $950 million less than the proceeds received.

Goldstone, however, tried to remain upbeat. He noted that even though delinquencies were likely to continue to increase over the balance of the year, "the credit quality of our originated and acquired loan portfolio continues to perform extremely well, and their performance is consistent with our current estimates."

One year ago, this stock traded at $27. The stock was selling at roughly 71 cents in recent mixed trading Thursday.

Credit Suisse analyst Moshe Orenbuck has a 12-month target price of 50 cents on the stock and calculates that that is actually a 25% premium to the expected book value.

"As a result of the additional shares we now estimate that book value (using principal outstanding) is about 35 cents to 40 cents, compared to our estimate of 60 cents under the initial terms of the note. Common book value would be negative using current market values of the assets."

Thornburg has frantically raised capital in attempts to avoid bankruptcy.

"These unprecedented market conditions led to an inability to meet resulting margin calls on our borrowed funds, a need to sell assets and seek alternative permanent financing for other assets in our portfolio, and a need to negotiate an agreement with our reverse repurchase and auction swap agreement counterparties to prevent a liquidation of our entire mortgage securities portfolio," Goldstone said in a company statement.

Fellow lenders Freddie Mac ( FRE) and Fannie Mae ( FNM) were given the opportunity to issue mortgages over the previous limit of $440,000, allowing the lenders to compete with Thornburg's jumbo loans. On Thursday, Freddie Mac sold $3 billion three-year reference notes on Thursday priced at $99.757 to yield 3.960% over U.S. Treasuries.

Commercial real estate lender iStar Financial ( SFI) has also been beaten down, but not to the severity of the residential market. It is still earning money and not reporting huge losses. Impac Mortgage Holdings ( IMH) based out of Irvine, Calif., is down 85% in value for the year, while Annaly Capital Management ( NLY) is up 14% for the year. Annaly is a real estate investment trust and engages in the ownership, management and financing of a portfolio of investment securities, while Impac primarily invests in and holds mortgages that were acquired and originated by the company's mortgage operations.

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