Jumbo Servicer/Investor Cuts Deal with Bankers

Thornburg Mortgage Inc., Santa Fe, N.M., on Friday reached an agreement with several of its reverse repurchase counterparties allowing for it to make the interest payment on its 8% senior notes that was due last month. The past-due payment will be made within the 30-day grace period allowed under the indenture. The counterparty lenders agreed that during the override period, which expires on March 16, 2009, they will not invoke any margin calls on the jumbo investor. Thornburg's common shares have been delisted but continue to trade on the "pink sheets." Thornburg agreed to pay the counterparties the remaining $110 million out of the liquidity reserve fund except for $41.2 million, which the company can utilize to make the foregoing senior notes interest payments and for forecasted operating expenses and debt service payments through March 2009. The company has also agreed to pay to the counterparties all of the principal and interest collected on the underlying collateral subject to the override agreement to further reduce the outstanding financed balance on an accelerated basis. The reverse repurchase agreement counterparties and their affiliates who entered the override agreement include JPMorgan Chase Funding Inc. (formerly Bear Stearns Investment Products Inc.), Citigroup Global Markets Limited, Credit Suisse Securities (USA) LLC, Credit Suisse International, Greenwich Capital Markets Inc., Greenwich Capital Derivatives Inc., The Royal Bank of Scotland PLC and UBS AG.