The breaking story today on the business news wires is that one of the largest jumbo loan lenders Thornberg Mortgage Inc. faces over 270 million due in margin calls.  In anticipation of the stock market opening, shares values are way off.  Thornberg does not seem to be in a position to meet the margin calls.  That is a major problem for viability!  What triggered this was Thornbergs Mortgage Inc. default on 28 million in margin calls on Friday the 28th of February.  When one creditor is not paid, it sometimes triggers a bunch more calls form creditors waiting in the wings.  The question?  Will Thornberg Mortgage Inc. survive?  If not, who else will be able to pull up the slack for the upper end market? 

If a company that specializes in a particular niche market defaults, it may place an undue burden on other lenders, buyers and sellers.  If credit tightens further on the upper end that means sellers will sit longer, and buyers may have a harder time obtaining financing as credit tightens further.  As homes on the market sit they are subject to further price drops, and foreclosures due to the fact they cannot refinance the property, and rate adjustments take repayment out of reach. This is a no-win situation for all and truly "Vicious Circle!"  I personally feel that the potential default and loss of a niche lender is a major loss for all because they are specialist serving a particular market need.  They fill a gap that many others have already chosen not to fill.  Your thoughts would be appreciated.

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