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Saturday, March 8, 2008

Housing/Subprime Roundup — March 8, 2008

Items of interest:

Bankrupt lenders throwing away your privacy -- Some mortgage companies tossing customers’ personal data in the trash

As recently as August, First Magnus Financial Corp. was the subject of a magazine feature hailing it as a “technological powerhouse” ready for the future thanks to its “tech-savvy management team.”

Just two weeks later, First Magnus, one of the nation’s largest mortgage lenders, whose headquarters was one of the biggest employers in Tucson, Ariz., was out of business, another victim of the disintegration of the U.S. mortgage industry.

Among the revelations about Magnus was that it wasn’t quite as technologically advanced as had been billed. Most of its borrowers’ records were still on paper, as Floridians learned when thousands of loan documents were discovered in boxes in an unlocked trash Dumpster in Fort Lauderdale. [...]

Thornburg can't meet $610M in margin calls -- Jumbo mortgage lender plans to take $427.8 million write-down

Thornburg Mortgage Inc. said Friday it does not have enough cash to cover current margin calls and it will restate past financial results to account for a decline in the value of its mortgage securities.

Thornburg, a jumbo mortgage lender and real estate investment trust, said it has $610 million outstanding in margin calls, which “significantly exceeded its available liquidity.” It has already met $1.17 billion in margin calls since the beginning of the year.

Margin calls force borrowers to repay loans or put up more collateral to secure them. If a borrower is unable to meet the calls, the creditor typically can seize and liquidate assets used as collateral against the financing agreements. [...]
Mortgage News Daily:
Margin Calls Threaten Two Mortgage Companies/Investors -- According to The Wall Street Journal, Carlyle Capital is well beyond the 50% requirement for margin support, leveraging its $670 million equity 32 times to finance a $21.7 billion portfolio of residential mortgage-backed securities issued by U.S. housing agencies Freddie Mac and Fannie Mae.

Carlyle Capital was initially launched as a private fund in 2006 but it is its parent company that is much more interesting.

According to its website, "The Carlyle Group, headquartered in Washington D.C., was established in 1987 as a "private global investment firm that originates, structures and acts as lead equity investor in management-led buyouts, strategic minority equity investments, equity private placements, consolidations and buildups, and growth capital financings."

Among the major players that have, over the years, been closely associated with the Group are former Secretary of State James Baker, III; former Defense Secretary Caspar Weinberger; billionaire George Soros; members of the bin Laden family and, most notably, Carlyle Group Director George H. W. Bush.

The second company, Thornburg Mortgage, Inc also announced this week that it was facing default as it failed to meet "a substantial number" of new calls it was facing. [....]
So Much for That Mortgage REIT Bull Market - Seeking Alpha
Mortgage-Backed Securities Market Rocked by Thornburg Default - Seeking Alpha
Thornburg Mortgage future in doubt - CNNMoney

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