Another Major Home Loan Lender in Turmoil
Trading was halted yesterday in shares of the lender Thornburg Mortgage Asset after they plunged 47 percent, the most since their 1993 initial public offering.
Earlier, five brokerage firms downgraded the stock and Moody’s Investors Service cut its debt rating amid turmoil in the home loan market.
The home loan lender announced later that it would delay payment of its quarterly dividend, 68 cents a share.
Brokerage firms cited concerns that Thornburg, which specializes in high-quality, prime rate jumbo mortgages, might need to sell assets or reduce its dividend because of a liquidity squeeze.
Paul Miller, an analyst for Friedman, Billings, Ramsey & Company, lowered the mortgage lender’s stock to underperform from market perform.
Miller said that the downgrade reflected “the current liquidity crisis in the asset-backed commercial paper and repurchase markets.”
Piper Jaffray, the Credit Suisse Group, Jefferies & Company and RBC Capital Markets also lowered their ratings to underperform.
The nation’s biggest home mortgage lenders face a worsening cash shortage because investors who buy their loans are not bidding, and bankers have cut off credit lines.
The fallout has led to at least 70 mortgage company casualties and counting.
Thornburg, based in Santa Fe, N.M., said in a statement to lending partners yesterday that new requests to lock in mortgage rates would not be accepted for four days. The company said it was being inundated with lock requests because few other lenders were honoring the requests.
“We’re funding loans on a priority basis,” a spokeswoman, Suzanne Lopez, said. “The market is a bit crazy right now, but we’re funding loans as of today, just not at the rate we’ve done in a normal market environment.”
Thornburg shares fell $6.67, to $7.61, before trading was halted on the New York Stock Exchange. Moody’s cut Thornburg’s credit ratings yesterday by two levels, to B2, its fifth-highest speculative-grade ranking.
SOURCE: New York Times / Bloomberg News