Jumbo lender Thornburg Mortgage Inc. says it won’t make a 68-cents-per-share payment to shareholders today as scheduled because of a “sudden and unprecedented decline” in the market price of its mortgage securities.

The decline began on Aug. 9 and prompted an increase in margin calls by the Santa Fe-based lender’s creditors, the company said in a press release explaining the decision.

Thornburg Mortgage said it has also experienced delays in its ability to fund loans, prompting the company to stop accepting new requests to lock in rates for four days.

“We regret having to take these steps, but present market conditions have placed unprecedented restrictions on our industry and on us that have forced this change in policy,” the company said in a memo to lending partners that was posted on IndyMac Bank’s company blog. “Due to the fact that very few lenders are currently accepting locks, Thornburg Mortgage is being inundated with lock requests.”

Organized as a real estate investment trust (REIT), Thornburg Mortgage specializes in adjustable-rate jumbo mortgages. Loan originations totaled $1.7 billion in the second quarter — a 21 percent increase from the same period last year, the company said in its most recent report to investors.

At the end of June, Thornburg Mortgage reported holding $48.7 billion of hybrid adjustable-rate mortgage (ARM) assets, with the interest rates on $5.7 billion in loans set to reset in the next 18 months.

The ARM assets included “A quality” ARM loans that Thornburg Mortgage purchased or originated and securitized into ARM pass-through certificates or collateralized mortgage debt financings for the company’s own portfolio. Thornburg Mortgage retains the risk of potential credit losses on all of the loans, and had set aside $15.7 million for loan losses as of June 30.

Thornburg Mortgage said it was also a counterparty to hybrid ARM hedging instruments consisting of $44.3 billion in swap agreements. The company also had $24.7 billion of reverse repurchase agreements outstanding at the end of June.

Reverse repurchase agreements involve a simultaneous sale of pledged securities to a creditor, which Thornburg has agreed to repurchase at a future date at a higher price, with the difference representing the cost of borrowing.

Thornburg Mortgage warned investors that the company’s borrowing ability under such agreements “could be limited, and lenders could initiate margin calls in the event of interest-rate changes or if the value of our ARM assets declines for other reasons.”

The current trials and tribulations of the home mortgage market stem from a re-pricing of risk. There is no shortage of mortgage money — quite the contrary; an army of loan providers out there are desperate for customers. The problem is that some kinds of customers are no longer eligible under the new rules, and others who remain eligible must now pay a much larger premium over the best price than was the case earlier.

An industry that had become conditioned to rules that allowed most anyone to get a loan now must turn customers away. This is painful, just as denying a heroin addict the fix to which he had become accustomed is painful. But we try to be compassionate with addicts and help them make the transition to a normal life as easy as possible. Is there something that can be done to make the market’s transition less painful?

Some are proposing that the Federal Reserve step in to lower interest rates. There isn’t a lot of scope for that because mortgage rates today are only about 1 percent above their lowest point reached in mid-2003. Further, the Fed has many more things to consider in setting its policy targets than the transitional pain of the home loan market.

But even if the Fed viewed pain relief in the home loan market as a priority, lowering the general level of rates would mainly help the mortgage borrowers who don’t need help. Lowering rates will not affect the investor guidelines that have made some borrowers ineligible. Those who have become ineligible under the new rules would remain ineligible. Rates in the high-risk niches that are still being priced probably would fall a little, but nothing to match the previous price increases.

In short, there would not be a lot of benefit to set against the costs of changing Fed policy to one that is more liberal than the Fed would have selected otherwise.

I hear rumors that Fannie Mae and Freddie Mac have proposed that they be allowed to help by making loans they are not now authorized to make, specifically “jumbo” loans larger than their current limit of $417,000. The agencies would dearly love to get out from under that limit, which is going to run through 2008 and maybe even beyond if housing prices don’t recover.

But there is no shortage of money for jumbo loans, the shortage is in the higher-risk niches, some jumbo but many not. A credible offer by the agencies would be to make loans in high-risk niches that the private market has now placed out of bounds, and/or to offer better prices in high-risk niches that the agencies believe are being overpriced. In either case, the agencies should define these niches exactly as they would appear in their underwriting manuals, and provide credible evidence that the niches are closed or overpriced.

I’m not sure that, even if the agencies provided an explicit and valuable quid pro quo, the deal would be a good one. Fannie and Freddie are already far too big. If it were my call, I would freeze their loan limits forever so that their market share (and political clout) gradually declined. If the limit were raised instead, there should be an attached sunset clause that automatically terminates the authority after a specified period, such as 12 months.

The National Association of Realtors expects new single-family home sales to fall 18.9 percent and single-family housing starts to plummet 23 percent this year from 2006 levels, according to the group’s latest forecast.

The median price of new homes is expected to fall 2.3 percent this year, with the median existing-home price falling 1.2 percent compared to 2006, the group also reported.

Existing-home sales are expected to fall 6.8 percent this year to 6.04 million, compared with 6.48 million in 2006, and to rebound to 6.38 million in 2008. The forecast calls for new single-family home sales to reach 852,000 this year, compared with 1.05 million in 2006, and to fall further to 848,000 in 2007.

This latest forecast represents some changing expectations compared to previous forecasts. The association’s previous annual forecast, released in July, anticipated 6.11 million existing-home sales and 865,000 new-home sales in 2007, for example, while calling for a 2.6 percent drop in the median new-home price and a 1.4 percent drop in the median existing-home price.

“More buyers, and cutbacks in new construction, will eventually draw down the inventory levels and support future price appreciation, but general gains will be modest next year,” stated Lawrence Yun, NAR senior economist.

The forecast released today calls for the median existing-home prices to rise 2 percent and for the median new-home price to rise 2.3 percent in 2008 compared to 2007. The association expects existing-home sales to rise 5.6 percent and for new single-family sales to drop 0.5 percent in 2008 compared to 2007.

“Mortgage disruptions will hold back sales over the short term,” Yun stated, and he expects a “modest upturn … for existing-home sales toward the end of the year, with broader improvement to include the new-home market by the middle of 2008.”

The 30-year fixed-rate mortgage is forecast to average 6.7 percent in the fourth quarter and to drop to the 6.5 percent range next year.

Growth in the U.S. gross domestic product is projected to be 1.9 percent this year compared to a 2.9 percent growth rate in 2006, and is expected to reach 2.8 percent in 2008.

The unemployment rate is estimated to average 4.6 percent this year, unchanged from last year. Inflation, as measured by the Consumer Price Index, is forecast at 2.7 percent this year, down from 3.2 percent in 2006, and is forecast to fall to 2.2 percent in 2008. Inflation-adjusted disposable personal income should rise 3.1 percent in 2007, the same rate as last year, and is expected to drop to 2.4 percent in 2008.