Shares of Thornburg Mortgage Inc. (TMA) plunged 44% to $1.92 in after-hours trading after the home-mortgage lender late Wednesday disclosed that its failure to meet a $28 million margin call caused a series of cross-defaults. Thornburg also said JPMorgan Chase Bank N.A., which made the original margin call, will "exercise its rights."
In Wednesday's disclosure, Thornburg didn't specify those rights, but in a previous filing with the Securities and Exchange Commission the company said that the lender has the "right to liquidate pledged collateral." Thornburg said it was loaned $320 million under reverse repurchase agreements made with JPMorgan.
The notice of default from JPMorgan triggered cross-defaults "under all of the Company's other reverse repurchase agreements and its secured loan agreements," the company said in Wednesday's filing. Thornburg offered no description of the amounts involved in the cross-defaults, but said its "obligations under those agreements are material."
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