Back in Black: Thornburg Mortgage Posts Q4 Profit

Cue up the AC/DC: ultra-prime jumbo ARM mortgage specialist Thornburg mortgage said Monday afternoon that it had swung to a fourth quarter profit, just one quarter after posting a $1.1 billion loss.

The Santa Fe, New Mexico-based lender earned $64.8 million, or $.34/share, in the fourth quarter of 2007 — off 19 percent from $80.3 million, or $.68/share, from the year ago period.

“Financing mortgage assets will remain a challenge particularly for investment grade mortgage backed securities rated AA to BBB, even for those backed by prime jumbo ARM loans,” said Larry Goldstone, president and chief executive officer. “However, we have begun to see financing conditions improve.”

Credit quality remains strong, the company reported. 60-day plus delinquent loans and REO totaled 0.44 percent of the company’s $24.6 billion portfolio of securitized and unsecuritized loans, up from 0.27 percent in Q3, but still significantly below the industry’s conventional prime ARM loan delinquency ratio of 4.23 percent.

Allowance for loan losses totaled $17.6 million, or .07 percent of the total loan portfolio, at the end of Q4 and net of charge-off activity. Allowance for losses on REO properties totaled $4.2 million, or 24.96 percent, of the total REO portfolio, Thornburg said. The lender realized loan losses of $735,000 during the fourth quarter and recorded $601,000 in write-downs related to REO that it expects to sell in the future.

Touts broker correspondent, wholesale growth
The company is growing its correspondent and wholesale lending channels during a time when most mortgage banking operations are pulling back dramatically on both.

“Even though 2007 was a challenging year for mortgage lenders, our correspondent relationships grew by 12 percent and we now have 306 correspondent partners approved to originate loans that meet our pricing and underwriting specifications,” Paul Decoff, senior executive vice president and chief lending officer, said. “Based on the latest mortgage origination statistics, we are the nation’s 19th largest correspondent lender.â€?

“Our wholesale channel has also gained a great deal of momentum,” he continued.

“We now have 18 account executives in targeted geographic regions supporting 684 brokerage firms. We continue to believe this channel will be our fastest-growing loan origination channel and will provide an attractive source of higher yielding loans for our portfolio.”

The company expects to see 33 percent of total origination in 2008 via its wholesale channel, it said.

For more information, visit http://www.thornburgmortgage.com.