The news agency today follows up on the sell-off of Thornburg Mortgage’s $11 billion-plus in servicing rights, which SFR mentioned in its year-end wrapup:

NEW YORK, Jan 4 (Reuters) – Bankrupt U.S. mortgage lender Thornburg Mortgage Inc (THMRQ.PK) is seeing “wide interest” in the auction for its $11 billion mortgage servicing portfolio…

Dozens of traditional mortgage banks, banks, hedge funds, private equity firms, and special servicers have expressed interest in the portfolio.

Of that group, more than 20 are likely to meet qualifications to bid on the portfolio this week…

I ran across this blog a week or so ago, after SFR’s cover on Thornburg Mortgage. It’s written by a woman in Chicago who bought a house with a Thornburg loan. Now that the company’s in bankruptcy, she wants Thornburg borrowers to “unite” to persuade the company to offer them the right to buy back their mortgages. “Banks buy back their debt,” she writes. “Why can’t we?”

Good question.

Reuters business blogger Felix Salmon endorsed her idea, with a caveat:

The borrowers are saying that if Thornburg is willing to sell their loan to an outside investor for 69 cents, it should be even more willing to sell that loan back to the homeowner for 70 cents. But in fact it’s more complicated than that. The homeowners who are willing and able to buy back their own loans for 70 cents on the dollar are generally the most valuable of Thornburg’s borrowers — they’re overwhelmingly likely to be the ones whose loans are worth par, or more. So if Thornburg allows them to buy their own loans back, the value of the remaining mortgages goes down, and the investors aren’t going to be willing to pay 69 cents on the dollar any more.

Also, Kelli K, the author of the Thornburg Borrowers Unite blog, broke a little news the other day, after calling the firm that’s handling Thornburg’s bankruptcy, Houlihan Lokey. Here’s what they told her:

First of all, despite what many of us believed, Thornburg did NOT keep many of our loans on their books. I was told there were “maybe a dozen” mortgages that had not been securitized. In other words, there are a few crumbs at the bottom of the cookie jar.

For everyone else, the only question that remains is who will take over the servicing rights that Thornburg used to enjoy. I was told that the company’s creditors are trying to figure out who walks off with that prize right now. If you received the same email I got yesterday from Thornburg, you already know that it may take up to 90 days for us to learn who the new servicer is.

What’s the upshot for those who live in Thornburg’s backyard? Not much. Not many New Mexicans were Thornburg customers. This is just a little glimpse into the isues that come up in a bankruptcy.

In this week’s article on Thornburg Mortgage, I quoted former venture capitalist and author Eric Janszen on whether the housing crash that ultimately claimed one of Santa Fe’s largest employers could’ve been predicted or not.

Our phone interview ranged too far for that article, but we thought Janszen’s thoughts on capitalism’s boom-bust cycle and the rise of what he calls the “FIRE economy”—for finance, insurance and real estate—were worth sharing at length.

Basically, he thinks the government started selling everybody out to big creditors decades ago, and the massive debt burden that resulted has paralyzed the economy.

Janszen, who lives in Boston, also has some thoughts on the federal recovery plan, with its focus on “green jobs”: “How many mortgage brokers does it take to screw in an energy-saving lightbulb?” he asks.

You write the punchline.

SFR INTERVIEWS ERIC JANSZEN

I liked your Harper’s article on the housing bubble.

Thanks. It seems to be panning out.

That was back in early 2008, when many people hadn’t yet grasped the extent of the subprime mortgage crisis. But you went so far as to predict the next bubble—green energy.

I’m actually working on a book on that. So far it does seem likely to focus on infrastructure.

The refrain I keep hearing was that nobody saw the real estate crash coming. You say people could’ve seen it coming.

Many people did, of course. And many people who did made money on seeing it coming. It wasn’t all that hard. There were a few fantasies you had to not buy into. One is that housing prices always go up, and stock prices always go up.

If any other product was sold based on those premises, you’d think people would be somewhat skeptical. It’s pretty marvelous to convince so many people of something that can’t possibly be true.

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