Mortgage Insurer Triad Guaranty Finished, Alt-A Mortgage Lender Thornburg On The Brink Again

Triad Guaranty, the mortgage insurer, has announced that its negotiations with Lightyear Capital LLC to form a new mortgage insurance company have been terminated.  The company will cease writing new business, lay off employees, and run-off its existing book.  Formerly a Freddie Mac approved mortgage insurer, Triad was suspended from doing new business with Freddie in May because it no longer met mortgage insurance eligibility requirements.  Triad appealed the decision, but Freddie has denied the appeal.

In other similarly alarming mortgage industry news, Thornburg Mortgage Inc. said in a filing with the SEC that its survival is in doubt.  The company has also been subpoenaed by the SEC over the restatement of its 2007 results.  Thornburg stated in the securities filing that "recent adverse developments in the mortgage finance and credit markets has adversely affected our business, our liquidity and our stock price" raising doubts over the company's ability to continue as an ongoing concern.  Given that the company was forced into a massive restructuring that caused it to narrowly avert bankruptcy in April, this news is somewhat surprising.  The company raised $1.35 billion two months ago, restructured its obligations, got a stay of execution from its repo lenders and completely diluted the shareholders.  The fact that they are again suffering from liquidity problems is a testament to how poorly their assets continue to perform.  It is also an ominous sign for the rest of the market.