Business Model
The company's business model was originally a conventional passive mortgage REIT, but Thornburg Mortgage later branched out to originating mortgages, working with other financial institutions (a.k.a. correspondent origination) from 1999, selling directly to consumers (direct retail origination) from 2001 and moving into wholesale origination in 2006. The company markets its products via print advertising, direct mail and online, avoiding the significant expenses associated with maintaining a network of branches. Other ways that the company looks to reduce expenses is by outsourcing the underwriting and servicing of its mortgages.
Thornburg Mortgage's customers are typically affluent and with superior credit. According to the company's own figures (as of March 31, 2007) the average borrower had an annual income of $204,012 and a FICO score of 743. The rate of borrower default on these loans has also historically been significantly lower than the industry average.
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