Comments for "Thornburg Mortgage to file BK"
Anonymous says:
h
Anonymous Wed Apr 1 10:58:04 2009 CDT #
CRbot says:
This comment thread has been HALO-IZED by CRbot.
http://realize.org/cr/halokit.php?halourl=http://www.haloscan.com/comments/calculatedrisk/346040130704212670
CRbot Wed Apr 1 10:58:56 2009 CDT #
MarketBlogic says:
Dang! I really miss Tanta . . . . . the financial world is just not the same without her saucy bravado and irreverent cynicism.
RIP.
MarketBlogic Wed Apr 1 11:00:51 2009 CDT #
Nemo says:
(repost)
CNBC poll:
Is the Obama bank rescue plan worse than nationalization?
Nemo Wed Apr 1 11:01:22 2009 CDT #
Anonymous says:
"Famously to exclaim," not "to famously exclaim." Tanta would not approve of split infinitives.
Anonymous Wed Apr 1 11:01:50 2009 CDT #
Some Investor Guy says:
No hat tip? Maybe CR found this independently.
Some Investor Guy Wed Apr 1 11:01:52 2009 CDT #
Dutch_renter says:
"We're all subprime now!", I often think of that one. It's so true and yet still not understood. Even people who otherwise show a good understanding of the crises do not grasp the meaning of this.
Brgrds,
Dutch_renter
Dutch_renter Wed Apr 1 11:02:34 2009 CDT #
Effective Demand says:
FYI, Here is the break down of sales vs REO and SS for the San Fernando Valley and Ventura County, gives you a feel for how distressed the market is:
http://effectivedemand.blogspot.com/2009/04/short-sale-foreclosure-for-san-fernando.html
Also the foreclosure moratorium by the major servicers is supposed to lift yesterday. We should see if that holds true by next week.
Effective Demand Wed Apr 1 11:04:46 2009 CDT #
MPinCO says:
Last
MPinCO Wed Apr 1 11:06:54 2009 CDT #
Dead_Monkey_Bounce says:
Effective, those are staggering charts
Dead_Monkey_Bounce Wed Apr 1 11:07:25 2009 CDT #
CRbot says:
New Thread: Ford U.S. March sales fall 40.9%
http://www.calculatedriskblog.com/2009/04/ford-us-march-sales-fall-409.html ( 1 comments )
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CRbot Wed Apr 1 11:09:14 2009 CDT #
ARGH says:
April 1 (Bloomberg) -- U.S. Treasury Secretary Timothy Geithner’s plan to remove toxic assets from bank balance sheets will fail to revitalize the financial system, “Black Swan” author Nassim Nicholas Taleb said.
“I don’t understand why I as a taxpayer need to subsidize those who failed, by giving them options so they can rebuild their balance sheets,” he said. “Taxpayers take the downside and Wall Street as usual is going to take the upside, another classical problem of socializing the losses, privatizing the gains.”
Taleb said it’s “shocking” that the government would allow banks to estimate the value of the toxic assets that remain on their books because there is effectively no market for the securities, making them almost impossible to value.
“I don’t understand letting banks mark to market, after all this incompetence,” he said. “Why don’t we allow people to mark their house at what they think the value of their house is?”
http://www.bloomberg.com/apps/news?pid=20601087&sid=a7DbIc6WLhmU&refer=home
ARGH Wed Apr 1 11:09:26 2009 CDT #
Effective Demand says:
DMB,
Not a lot of normal sellers selling. I post inventory graphs every weeks and REOs are running out in our local area because of the foreclosure moratorium. If we get some more realistic supply soon sales should be pretty great this year. Otherwise sales would probably slow going into July or so.
Effective Demand Wed Apr 1 11:10:47 2009 CDT #
bearly says:
Total Liabilities - $34BILLION
Total Assets ????
CDS outstanding, anyone's guess!
bearly Wed Apr 1 11:11:08 2009 CDT #
Anonymous says:
Pull a tarp over it - one way or another.
Anonymous Wed Apr 1 11:22:29 2009 CDT #
Divide by 0 says:
I miss tanta
Divide by 0 Wed Apr 1 11:23:24 2009 CDT #
Yearning to Learn says:
this news is interesting in the fact that Thornburg really was doing things "right".
they were a Prime outfit only, right?
and still failed.
shows how rotten everything is right now.
Yearning to Learn Wed Apr 1 11:29:09 2009 CDT #
Anonymous says:
I'm rather close to Thornburg. It is very unsettling. Their default rate is under 2%. Their key problem was overleverage & that was just plain stupid. Early warning was Feb 2007 - plenty of time to buy a bank or otherwise recapitalize (though they did go out & sell a lot of Preferred...) but I believe Larry was delusional about the return to "normal". Wishful thinking kept them from taking necessary action early enough. For 18 months, all their revenue is from servicing. Don't think they've initiated anything.
I bet Larry & Garrett will return to this business with a new company, probably located in the Thornburg campus, doing what TMA was doing, except with less leverage...
Parent Post
Anonymous Wed Apr 1 13:55:28 2009 CDT #
Noonan says:
Thornburg didn't pay off the right Politicians
Noonan Wed Apr 1 11:40:04 2009 CDT #
Uncle Billy, Mental Widget says:
Wanna bet?
Parent Post
Uncle Billy, Mental Widget Wed Apr 1 13:24:08 2009 CDT #
Michael says:
It's about time.
Michael Wed Apr 1 12:01:08 2009 CDT #
Gust says:
I hate experts and specialists
Gust Wed Apr 1 14:30:39 2009 CDT #
solohedger says:
Long time coming. Thornburg yelled loudly and often that their excrement did not stink. The laws of bacterial decomposition appear to have won.
solohedger Wed Apr 1 14:43:41 2009 CDT #
Anonymous says:
Let's travel back in time.
"We have no intention of filing Chapter 11."
Many bankers are also refusing to extend credit to mortgage lenders. Nonetheless, Moody's said Thornburg has "superior asset quality."
http://www.cnbc.com/id/20264649
Anonymous Wed Apr 1 15:15:35 2009 CDT #
Anonymous says:
Thornburg Mortgage Sees Return to Normalcy
By Mark DeCambre
TheStreet.com Senior Writer
8/30/2007 5:01 PM EDT
http://www.thestreet.com/b/newsanalysis/banking/10377295.html
Anonymous Wed Apr 1 15:19:38 2009 CDT #
maynardGkeynes says:
I don't undersatnd why they are in such trouble with such low default rates. With a 2% default rate, and 50% recovery, shoudn't there paper still be 99 par?
maynardGkeynes Wed Apr 1 15:24:09 2009 CDT #
Troy says:
<i>I don't undersatnd why they are in such trouble with such low default rates.</i>
At the end of 2006 they had $50.3B in liabilities against $2.3B in equity. 25X leverage ratio.
<i> except with less leverage</i>
Indeed. AHR's got a 5X leverage ratio and it's somewhat doubtful they're going to pull thru.
Troy Wed Apr 1 15:52:06 2009 CDT #
AnonyMiss says:
Dang! I really miss Tanta . . . . . the financial world is just not the same without her saucy bravado and irreverent cynicism.
RIP.
---
Indeed, I truly appreciate CR and his incredible work on these issues but I miss the spice and insight that Tanta brought to these discussions.
I beg all of you who feel the same to make a contribution of any size to the charities established in her name. I can guarantee that her family appreciaties contributions of any size.
http://www.calculatedriskblog.com/2008/12/doris-tanta-dungey-endowed-scholarship.html
AnonyMiss Wed Apr 1 16:11:19 2009 CDT #
Guy Smilie says:
TMA used a lot of repo to finance their positions. Very low cost funding, unless it disappears entirely. They were essentially a public mortage hedge fund with a REIT structure. Their business model was to take NO credit risk on the assets and leverage up with lowest cost funding.
When their funding dried up in 2007, they were toast. It didn't matter at that point that they had (If I recall correctly) ZERO delinquencies in their originated assets and less than 1% in a set of mortgages they purchased. The funding had dried up, and at the time, even GinnieMae mortages were trading in the low to mid ninties. In December, TMA sold $20B of its $60B mortgages to meet their margin calls, and the bids were in the 70s. Keep in mind this portfolio had zero delinquencies, was seasoned, had low LTVs, and not merely high FICO, but actually fairly wealthy borrowers. They only had about $3B of equity, so that was it. (Loss on $20B x 30% = $6B. $3B - $6B = -$3B) They tried to recapitalize, but the great margin call was on.
So...this was not a lousy asset problem like most mortgage lenders. This was a classic borrow short, lend long problem.
The principals very well could be back with a lower leverage, termed out/duration matched structure. If they can arrange the financing, the spreads available in very high credit quality jumbos are attractive. Mkt prices for their old book of assets are in the high 50s today. Even with record defaults all over factored in, the unlevered YTM is 15% or more.
Yes, this means that the jumbo rates being offered by large banks today are considerably less than they could get buying loans in the secondary market. When they originate a loan at 8%, they would take a loss right away on origination if they had to MtM whole loans. If the secondary market does not return, the banks may have to cave on this and raise jumbo rates even more.
Guy Smilie Wed Apr 1 17:08:38 2009 CDT #
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