Thornburg Mortgage Asset Corporation, (NYSE: TMA) is a special purpose financial institution that invests in adjustable rate mortgage securities and by so doing provides capital to the housing market.
While TMA is not a bank or savings and loan, its business is best described in comparison to such institutions. TMA combines its equity capital with borrowed funds, invests in adjustable rate mortgage securities and generates income based on earning more on its assets than it pays for its borrowings. TMA is different from a bank in that, as a real estate investment trust (REIT), it is not subject to corporate income tax since it pays out its taxable earnings to its shareholders in the form of dividends.
TMA has developed a business strategy that it believes reduces many banking risks while retaining attractive profit potential. |