892535--3/7/2006--THORNBURG_MORTGAGE

related topics

{investment, property, distribution}

{tax, income, asset}

{loan, real, estate}

{personnel, key, retain}

{system, service, information}

{interest, director, officer}

{provision, law, control}

ARM yields change as short-term interest rates change. Book value changes as interest rates change. We borrow money to fund the purchase of additional ARM Assets. A significant contributor to our earnings is the interest margin between the yield on our ARM Assets and the cost of our borrowings. Our mortgage assets may be prepaid at any time at the borrower s option. We acquire Hybrid ARM Assets that have fixed interest rate periods. We originate and acquire ARM loans and ARM securities and have risk of loss due to mortgage loan defaults. Our expansion into mortgage loan origination may not be successful. Our REIT tax status creates certain risks. The loss of the Investment Company Act exemption could adversely affect us. We are dependent on certain key personnel. Some of our directors and officers have ownership interests in the Manager, which may create conflicts of interest. We may change our policies without shareholder approval. Our technology infrastructure and systems are critical to our success.

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892535--3/7/2006--THORNBURG_MORTGAGE_INC