Home : Blogs : Jim Crawford ~ Atlanta Real Estate-ABR E-PRO : Atlanta Real Estate Blog - Jim Crawford REMAX Greater Atlanta

Jumbo Lenders Default - Non Conforming Loans in Risk? Upper Market Impact!

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.

Subscribe To Our Atlanta Real Estate Blog in a reader

Subscribe Now! ...with web-based news readers. Click your choice below:

Posted by Jim Crawford ~ Atlanta Real Estate-ABR E-PRO on 03/03/2008 09:05 AM

Comments (7)

alta jumbo loans lenders default creditors foreclosures credit crunch mortgage companies nonconforming rate adjustments failure loans lend

Post is included in group: Realtors®
Post is included in group: Mortgages
Post is included in group: The Art Of Marketing You
Post is included in group: RE/MAX Active Rain Bloggers
Post is included in group: Real Estate Rookie

7 Comments on Jumbo Lenders Default - Non Conforming Loans in Risk? Upper Market Impact!

Thanks for the information.

03/03/2008 09:15 AM

by Kim Kelley (Coldwell Banker Sky Ridge Realty)

Once this information becomes know to the markets, do you think the financials will take a large hit? C, CFC, WAMU, BOA, etc? I don't see it getting better before it gets worse and I don't think we are through this yet.

03/03/2008 09:28 AM

by Brian Kreick (Connect Realty)

Kim Kelley You're welcome.

03/03/2008 09:46 AM

by Jim Crawford ~ Atlanta Real Estate-ABR E-PRO (RE/MAX Greater Atlanta)

Brian Kreick I personally think the financials and builder stocks are in a classic "dead cat" bounce! They have run counter to the common sense market which has been retreating. Home builder profits minus their losses are not going to come back for years. The Financial groups cannot let us know they cannot lend, cannot pay because of bad assets that no one wants to buy.

03/03/2008 09:51 AM

by Jim Crawford ~ Atlanta Real Estate-ABR E-PRO (RE/MAX Greater Atlanta)

I was "really" surprised when their stock bounced back in January...I was like, you got to be freakin kidding me! Jumbo's are screwed! 70% of all the Jumbos out there are in serverely declining market areas...the higher something is, the longer its fall. Their underwriting was conservative but unfortunately, the other Jumbo lenders' underwriting was not quite so conservative.

TMA is a frog's fart away from the pink-sheets.

03/03/2008 09:55 AM

by Rich Sweum (Homestead Mortgage)

Rich Sweum Isn't this crazy how this has gone on this lon? It started last August the same time that Countrywide had their issues. I reember seeing the CEo on TV and he said this would never happen!

03/03/2008 11:23 AM

by Jim Crawford ~ Atlanta Real Estate-ABR E-PRO (RE/MAX Greater Atlanta)

Updated Story from Bloomberg.com

03/03/2008 12:36 PM

by Jim Crawford ~ Atlanta Real Estate-ABR E-PRO (RE/MAX Greater Atlanta)

Leave a response…

Name:

Notify me of new comments:

Comment:

What does the graphic say?