Thornburg Sells $20.5 Billion in Mortgage-Backed Securities

Thornburg Mortgage, which forced to stop taking home-loan applications earlier this month because of a cash crunch, said it sold $20.5 billion of mortgage-backed securities as part of a plan to return to “business as usual.”

The sales will result in a “capital loss” of about $930 million this quarter, the Santa Fe, N.M.-based company said Monday in a statement. Thornburg also made about $40 million by terminating “interest rate hedging instruments.”

Home lenders are finding new sources of capital after investors stopped buying their mortgages and bankers cut off credit. Luminent Mortgage Capital, an investor in home-loan securities, lined up about $125 million on Monday from Arco Capital. Delta Financial, a subprime residential lender, found investors last week to provide $70 million.

And KKR Financial earlier Monday said that it would seek up to $500 million via a private placement and a public rights offering.