|Defunct||April 1, 2009|
|Fate||Filed for Chapter 11 bankruptcy|
|Garrett Thornburg, Chairman |
Larry A. Goldstone, President and CEO
|US$ -1.55 billion (2007)|
|Total assets||US$ 36.27 billion (2007)|
Number of employees
Thornburg Mortgage was a United States real estate investment trust (REIT) that originated, acquired and managed mortgages, with a specific focus on jumbo and super jumbo adjustable rate mortgages. The company experienced financial difficulties related to the subprime mortgage crisis in 2007 and filed for bankruptcy on April 1, 2009.
It was founded in 1993 and prior to its failure it was a publicly traded corporation headquartered in Santa Fe, New Mexico. It got caught up in the financial crisis of 2007–2010 when it moved from a passive REIT to wholesale origination of mortgages in 2006.
The company was founded in 1993 by Garrett Thornburg & Larry A. Goldstone.Thornburg Mortgage's headquarters in Santa Fe, New Mexico were built to be eco-friendly.
The company's business model was originally a conventional passive mortgage REIT, but in 1999 Thornburg Mortgage branched out to originating mortgages,working with other financial institutions (a.k.a. correspondent origination). In 2001, it started selling directly to consumers (direct retail origination) and moved into wholesale origination in 2006.
On August 7, an analyst with Deutsche Bank downgraded Thornburg Mortgage to "Sell", based upon concerns that the company could be faced with increasing margin calls despite the high rating of its mortgage backed securities.Beginning August 9, these same securities experienced a "sudden and unprecedented" decline in value, along with an increase in margin calls. In response, during the week beginning August 13 the company stopped accepting loan applications, sold US$20.5 billion of its mortgage backed securities portfolio (in doing so incurring a capital loss of US$930 million), mitigated the potential for margin calls by reducing its repurchase borrowings and delayed payment of a previously announced stock dividend from August 15 to September 17. The company's stock price closed 47% lower when the delayed dividend payment was announced on August 14, but over the next few days regained most of those losses. A couple of weeks later the company also raised US$500 million through a preferred share offering, a move described as "a desperate attempt to stay afloat", and began accepting applications again.
On March 7, the company announced that it would be restating its 2007 financial results, and also that as of the previous day, it had US$610 million in outstanding margin calls, a much greater amount than cash available.Financial analysts speculated that the company may need to seek bankruptcy protection.
Thornburg Mortgage indicated on March 19 that it had reached an agreement with five of its creditors which stopped additional margin calls for one year but included several conditions, the most urgent of which was to raise US$948 million within seven business days.The five creditors were identified as Bear Stearns, Citigroup, Credit Suisse, Royal Bank of Scotland and UBS The company further confirmed that without the additional capital it may have to file for bankruptcy protection. The funding was to be raised through the sale of convertible notes. Having initially been scheduled for March 20, the company pushed back the sale until March 24.
On April 1, 2009, Thornburg Mortgage announced that it would officially cease operations, and enter Chapter 11 bankruptcy. After the sale of all remaining assets, it would no longer exist as a going concern.
The company's business model was originally a conventional passive mortgage REIT, but Thornburg Mortgage later branched out to originating mortgages, selling directly to consumers (direct retail origination) and wholesale origination. The company marketed its products via print advertising, direct mail and online, avoiding the significant expenses associated with maintaining a network of branches. Other ways that the company looked to reduce expenses was by outsourcing the underwriting and servicing of mortgages.
Thornburg Mortgage's customers were typically affluent and with superior credit. According to the company's own figures (as of March 31, 2007), the average borrower had an annual income of $204,012 and a FICO score of 743. The rate of borrower default on these loans had also historically been significantly lower than the industry average.
In corporate finance, a debenture is a medium- to long-term debt instrument used by large companies to borrow money, at a fixed rate of interest. The legal term "debenture" originally referred to a document that either creates a debt or acknowledge it, but in some countries the term is now used interchangeably with bond, loan stock or note. A debenture is thus like a certificate of loan or a loan bond evidencing the company's liability to pay a specified amount with interest. Although the money raised by the debentures becomes a part of the company's capital structure, it does not become share capital. Senior debentures get paid before subordinate debentures, and there are varying rates of risk and payoff for these categories.
A real estate investment trust (REIT) is a company that owns, and in most cases operates, income-producing real estate. REITs own many types of commercial real estate, including office and apartment buildings, warehouses, hospitals, shopping centers, hotels and commercial forests. Some REITs engage in financing real estate.
Preferred stock is a component of share capital that may have any combination of features not possessed by common stock, including properties of both an equity and a debt instrument, and is generally considered a hybrid instrument. Preferred stocks are senior to common stock but subordinate to bonds in terms of claim and may have priority over common stock in the payment of dividends and upon liquidation. Terms of the preferred stock are described in the issuing company's articles of association or articles of incorporation.
GE Capital is the financial services division of General Electric. Through its two divisions, GE Capital Aviation Services and GE Energy Financial Services.
Lehman Brothers Holdings Inc. was a global financial services firm founded in 1847. Before filing for bankruptcy in 2008, Lehman was the fourth-largest investment bank in the United States, with about 25,000 employees worldwide. It was doing business in investment banking, equity and fixed-income sales and trading, research, investment management, private equity, and private banking. Lehman was operational for 158 years from its founding in 1850 until 2008.
Bank of America Home Loans is the mortgage unit of Bank of America. In 2008, Bank of America purchased the failing Countrywide Financial for $4.1 billion. In 2006, Countrywide financed 20% of all mortgages in the United States, at a value of about 3.5% of United States GDP, a proportion greater than any other single mortgage lender.
The Ambac Financial Group, Inc., generally known as Ambac, is an American holding company. Its subsidiaries provide financial guarantee products such as bond insurance to clients in both the public and private sectors globally. Ambac Assurance is a guarantor of public finance and structured finance obligations. Its common stock and common stock purchase warrants are listed on the NYSE under the symbols AMBC and AMBCW respectively. Ambac is regulated by the insurance commission of Wisconsin. It has its headquarters in Lower Manhattan, New York City.
K·B Toys was an American chain of mall-based retail toy stores. The company was founded in 1922 as Kaufman Brothers, a wholesale candy store. The company opened a wholesale toy store in 1946, and ended its candy wholesales two years later to focus entirely on the toy industry. Retail sales began in the 1970s, under the name Kay-Bee Toy & Hobby.
Rocket Mortgage, LLC is a mortgage loan provider. It is headquartered in the One Campus Martius building in the heart of the financial district of Downtown Detroit, Michigan. In January 2018, the company became the largest overall retail lender in the U.S.. Unlike other large mortgage lenders that depend on deposits, Rocket Mortgage relies on wholesale funding to make its loans and uses online applications rather than a branch system. Amrock and One Reverse Mortgage are also part of the Rocket Mortgage Family of Companies. The company closed more than $400 billion of mortgage volume across all 50 states from 2013 through 2017.
New Century Financial Corporation was a real estate investment trust that originated mortgage loans in the United States through its operating subsidiaries, New Century Mortgage Corporation and Home123 Corporation.
American Home Mortgage Investment Corporation was the 10th largest retail mortgage lender in the United States and was structured as a real estate investment trust (REIT).
Suntech Power Holdings Co., Ltd. is a Chinese producer of solar panels, with 2,000 MW (2,700,000 hp) of annual production capacity by the end of 2011. It is headquartered in Wuxi, Jiangsu. Shunfeng International Clean Energy Limited, a HKSE listed renewable energy investment and Independent Power Producer company, acquired Suntech in 2014 following Suntech's bankruptcy in 2013. With offices or production facilities in every major market, Suntech has delivered more than 13,000,000 solar panels to thousands of companies in more than 80 countries around the world. As the center for the company's global operations, Suntech headquarters, in Wuxi, China, features the world's largest building integrated solar facade.
IndyMac, a contraction of Independent National Mortgage Corporation, was an American bank based in California that failed in 2008 and was seized by the United States Federal Deposit Insurance Corporation (FDIC).
American Freedom Mortgage, Inc. (AFM) was a private S Corporation incorporated on February 2, 2001, according to the Georgia Secretary of State, and headquartered in Marietta, Georgia. AFM conducted business as a multi-state direct-to-consumer correspondent lender and mortgage broker specializing in the origination of subprime and Alt-A mortgage loans. AFM also operated a wholesale mortgage lending division that originated loans via approved mortgage brokers and which used the fictitious name AFMI Funding. As a correspondent lender, AFM sold the mortgage loans on the open market to larger investors.
Michael W. Vranos is an American hedge fund manager and philanthropist who in the 1990s was referred to by some as the "most powerful man on Wall Street." In 1993, he reportedly earned $15 million from trading mortgage bonds. Fortune Magazine once called him "one of the best bond traders on Wall Street." According to a 2007 Wall Street Journal article, he has continued to be regarded as "the best-known mortgage-bond trader on Wall Street."
The J.G. Wentworth Company is a financial services company that purchases structured settlements, annuities, and lottery payments. They also offer debt relief services.
The bankruptcy of Lehman Brothers on September 15, 2008 was the climax of the subprime mortgage crisis. After the financial services firm was notified of a pending credit downgrade due to its heavy position in subprime mortgages, the Federal Reserve summoned several banks to negotiate financing for its reorganization. These discussions failed, and Lehman filed a Chapter 11 petition that remains the largest bankruptcy filing in U.S. history, involving more than US$600 billion in assets.
The government interventions during the subprime mortgage crisis were a response to the 2007–2009 subprime mortgage crisis and resulted in a variety of government bailouts that were implemented to stabilize the financial system during late 2007 and early 2008.
The financial crisis of 2007–2008, or global financial crisis (GFC), was a severe worldwide economic crisis that occurred in the late 2000's. It was the most serious financial crisis since the Great Depression. Predatory lending targeting low-income homebuyers, excessive risk-taking by global financial institutions, and the bursting of the United States housing bubble culminated in a "perfect storm." Mortgage-backed securities (MBS) tied to American real estate, as well as a vast web of derivatives linked to those MBS, collapsed in value. Financial institutions worldwide suffered severe damage, reaching a climax with the bankruptcy of Lehman Brothers on September 15, 2008, and a subsequent international banking crisis.
American Capital, Ltd. was a publicly traded private equity and global asset management firm, trading on NASDAQ under the symbol “ACAS” from 1997 to 2017 and a component of the S&P 500 Index from 2007 to 2009. American Capital was sold to Ares Management in 2017 at a sale price that totaled $4.1 billion.