Thornburg Mortgage Loan Backlog Funding Update
With this message, it is our intent to update our valued customers on the progress we are making as well as provide you with an estimate of our expectations as to the resumption of funding the backlog of loans that are in the queue for funding/purchase.
As previously noted by Larry Goldstone, “Our portfolio of mortgage-backed securities has exhibited exceptional credit performance and are comprised of loans that are among the most solid in the industry. Quite simply, the panic that has gripped the mortgage financing market is irrational and has no basis in investment reality”. The TMA executive team is working relentlessly to meet its outstanding obligations, stabilize the lending platform and increase its liquidity position.
The following events will give you an idea of the challenges: Since December 31, 2007, TMA has received $1.777 billion in margin calls on a portion (35%) of our portfolio that is financed with short-term financing. TMA has satisfied $1.167 billion of those calls leaving $610 million outstanding. TMA has entered into a temporary syndicate agreement with the counterparties effectively freezing these calls for a limited period of time allowing TMA an ability to pursue financial solutions. On March 3rd of 2008, TMA did complete a new securitization in the amount of $992 million utilizing collateralized mortgage debt (permanent financing not subject to margin calls). On March 7th, TMA announced that due to the complication of outstanding margin calls, our accounting firm (KPMG) required that TMA restate 2007 earnings thus necessitating a revised 10k. Due to our need to take a conservative approach and preserve cash and capital, funding delays did occur and, beginning on Friday February 29th, TMA has not funded any loans. TMA is working to meet all of the remaining margin calls within a timeframe acceptable to its lenders through a combination of selling select assets, issuing collateralized mortgage debt and raising additional debt or equity capital.
Once the outstanding margin calls have been met and as warehouse lines are reopened for new fundings, we will be prepared to resume funding the backlog. It is our expectation that this may occur before the end of this week. However, as this is a complicated and time consuming process, additional delays may occur which could cause the fundings resumption to be delayed further. We will provide you with regular status updates on our progress.
We thank you for your patience during what has become a difficult time in our industry. You can be assured that we are doing everything within our abilities to get beyond this current crisis. |