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.

It’s bankruptcy. The company announced the not-too-surprising decision this morning.

The Reuters story makes more sense than the press release:

NEW YORK (Reuters) – Thornburg Mortgage Inc (THMR.PK) said it plans to file for Chapter 11 bankruptcy protection and go out of business, making the provider of “jumbo” mortgage loans one of the largest casualties of the nation’s housing slump and credit crisis. …

Thornburg on Wednesday said it intends to sell or liquidate its remaining assets, with the assistance of the restructuring firm Houlihan Lokey Howard & Zukin Capital Inc. It also said it will not make an interest payment due March 31 on its senior subordinated notes maturing in 2015.

Keep watching SFR for more coverage of this story.

Update 4:50 p.m.-ish: Here’s a quote form tomorrow’s New Mexican, in the form of a press release from the city.

Please note that Santa Fe Mayor David Coss is out of the country and therefore requests for his comment on this matter cannot be granted at this time.

City of Santa Fe Economic Development Division Response to Thornburg News

Due to the large volume of phone calls received by the City of Santa Fe Public Information Office on the news that Thornburg Mortgage plans to file for Chapter 11 bankruptcy protection, the city’s Economic Development Division has issued the following statement:

The City of Santa Fe’s Economic Development Division has been closely watching developments at Thornburg Mortgage since the housing crisis and economic recession began. As a long-time Santa Fe business which employs many people at high-wage jobs and contributes heavily through its philanthropic endeavors, Thornburg is a valuable member of Santa Fe’s business community.

Today’s news further emphasizes the importance of the work of the City’s Economic Development Division to diversify the economy and create high-wage jobs. In these challenging economic times the City and its many partners are more committed than ever to helping people find and create work opportunities in Santa Fe.

Errmm… Official reassurances after the cut.

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