One of the premier lending institutions in the country is facing severe capital issues as a continued result of the credit crunch affecting the secondary market. Thornburg mortgage one of the nations largest jumbo loan lenders is fighting to stay alive after receiving margin calls of almost $600 million dollars in the past two weeks. The lender, which projected to be profitable into 2008 has historically had an excellent track record for managing credit risk and has over 33 billion of mortgages on their balance sheet. The problem is that like most lenders, they traditionally borrow money from institutional investors before lending this to consumers and make money through their margins once the loan is securitized and sold. Their challenge is that their is no secondary marketplace that is purchasing jumbo loans and they have are being forced to hold these loans and not generating the cash to pay back their short term creditors. They are backed by some large institutional investors such as LeggMason so its doubtful they will be forced into bankruptcy, but with the uncertainty in the credit markets anything is possible.

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