A federal judge this week ruled that the court-appointed trustee overseeing the liquidation of Thornburg Mortgage, Santa Fe, can move forward with a lawsuit against Barclays Capital alleging the investment banker made improper margin calls that helped drive the jumbo lender/servicer into bankruptcy.

According to a report by Dow Jones, Judge Ellen Lipton Hollander of the U.S. District Court in Baltimore said the trustee can sue Barclays for at least $94 million over the margin calls, and subsequent seizure and sale of the Jumbo MBS that Thornburg financed through BarCap.
She dismissed, however, the trustees' claim that the bank acted in bad faith. A BarCap spokeswoman declined to comment on the ruling.

Thornburg, a REIT that was headquartered in Santa Fe, but incorporated in Maryland, filed for bankruptcy protection in May 2009 after many of its warehouse lenders and bankers pulled out.
At the time of the filing, it was one of the largest jumbo/super Jumbo lenders in the nation, according to figures compiled by ASR sister publication National Mortgage News, and the Quarterly Data Report.

The decision is a victory for the bankruptcy trustee overseeing the liquidation, who is also suing Goldman Sachs. In that case, trustee Joel Sher is seeking $71 million from Goldman for what he says was the improper seizure of MBS that Thornburg had pledged to Goldman as collateral for lines of credit.

Sher also is suing may Wall Street warehouse lenders and bankers that lent Thornburg Mortgage nearly $2 billion, claiming a number of them — including JPMorgan Chase, Citigroup, and Credit Suisse  — engaged in series of "collusive" and "predatory" schemes that resulted in the nonbank's demise. The banks, in court papers, have denied wrongdoing.

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