Shares of jumbo mortgage lender Thornburg Mortgage, Inc. (NYSE: TMA) rebounded slightly after plummeting more than 50 percent on Monday.
The Santa Fe, New Mexico-based firm said Monday morning it has failed to meet the majority of its most recent margin calls. The company has received calls for $270 million of its reverse repurchase agreements.
The company said it may need to sell portfolio securities or raise additional debt or equity capital to meet the outstanding margin calls. Margin calls require that borrowers repay loans or support the loans with additional capital.
Late Monday, the company said it raised $992 million in financing from a deal involving its prime hybrid adjustable-rate mortgage loans. It expects an increased use of collateral for debt financing.
Thornburg said if it cannot repay the loans, it may go into default and liquidate the pledged securities, which could put the company out of business.
These margin calls are strictly the result of continued deterioration of prices of mortgage-backed securities precipitated by difficult market conditions, the company said in a statement.
We believe that this latest downturn in the mortgage finance market was brought on by a continued lack of trust and confidence in the broader financial markets and has resulted in a substantial excess of sellers versus buyers of high quality mortgage securities, said Larry Goldstone, president and chief executive of Thornburg Mortgage.
Shares of Thornburg mortgage fell $4.58, or 51.46 percent, to close at $4.32 on the New York Stock Exchange. The stock fell as low as $3.53 earlier in the session. Shares were up 3 cents, or 0.69 percent to $4.35 in after-hours trading.