Thornburg Mortgage Catches Two Breaks (TMA)

September 4, 2007 by Douglas A. McIntyre

Shares of Thornburg Mortgage (NYSE:TMA) are trading up by roughly 5% in pre-market activity.  This news could have been mostly expected, but the good news is that there was not a cancellation or delay. 

Thornburg announced the completion of a collateralized mortgage debt transaction that was collateralized by $1.44 Billion of its 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 last week on Thursday, August 30, 2007, and it was completed on Friday, August 31, 2007.

This transaction is accounted for as a financing and not as a sale, the proceeds of which were used to reduce the company’s borrowings under its ARM loan warehouse financing lines by approximately $1.37 Billion.  This should allow Thornburg to continue with the funding of existing loans in the pipeline and the company noted in the press release that it is positioned to continue increasing the pace of its mortgage loan funding.

The lender also saw its shares upgrades this morning in an analyst call. Thornburg shares were raised to Outperform from Underperform at Friedman Billings Ramsey.

If you have been watching the tape on the comments out of lenders, it appears that much of the ongoing market malaise tied to CDO’s and lending derivatives is seeming to get better and better.  If you won’t admit to better, it’s at least a lot "less bad" than when it looked like any and every lending house was at risk of imploding and like no one was ever going to be able to borrow again.

Jon C. Ogg
September 4, 2007

Jon Ogg can be reached at jonogg@247wallst.com; he does not own securities in the companies he covers.