Thornburg Mortgage continued to take losses on securitized loans in the third quarter, but was able to offset them with gains related to its senior subordinated secured notes, a principal participation agreement and warrant liability to produce a $140 million profit for the period.

The mortgage-related losses stemmed from further impairment of its mortgage-backed securities portfolio's fair value totaling $654.7 million and a $8.2 million net loss on the sale of adjustable-rate mortgages and real estate-owned.

The fair value gain related to the notes due 2015 totaled $594.6 million and the fair value gain related to the PPA and additional warrant liability totaled $160.2 million.

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