Thornburg Mortgage Inc. said Wednesday that it expects to file for bankruptcy protection, ending a fight for survival that began more than a year ago, when the Santa Fe, N.M., jumbo lender and real estate investment trust was hit with margin calls it could not meet.

Suzanne O'Leary Lopez, a spokeswoman for Thornburg, said its dissolution plan was the result of a single issue: "the inability to support the margin requirements for financing our mortgage securities portfolio, given the continued decline" in the prices of such bonds.

Thornburg said that its five lenders on roughly $4 billion of reverse repurchase agreements agreed not to press for the full amounts owed to them until the end of the month, and that it plans an "orderly sale or liquidation of its remaining assets."

Last month two of the creditors — Citigroup Inc. and UBS AG — took possession of their collateral, leaving Thornburg's debts at $394 million for Citi and $87 million for UBS.

On Wednesday, Thornburg said the other three creditors — Credit Suisse Group, JPMorgan Chase & Co. and Royal Bank of Scotland Group PLC — had indicated they would repossess their collateral.

The five creditors had agreed to limit margin calls last year as a part of a rescue deal in which a group led by MatlinPatterson Global Advisors LLC invested about $1.2 billion in Thornburg. Last month David Matlin and Mark Patterson resigned from Thornburg's board and surrendered their common stock.

Thornburg has said 1.58% of the loans in a $21.4 billion portfolio were 60 days or more past due at Sept. 30, the date of its last financial report. It contrasted that rate with the industrywide conventional prime adjustable-rate delinquency ratio of 8.25% at June 30 reported by the Mortgage Bankers Association.

Whether market prices reflect the cash flows that mortgage bonds will generate to maturity is, of course, a subject of heated controversy.

"There's such a disconnect between the current market price of these bonds" and the values many lenders ascribe to them, said Kevin Cavin, a mortgage strategist with First Horizon National Corp.'s FTN Financial Capital Markets. "There are a lot of bonds that are trading extremely cheap and still have a very good credit quality." The market price for "clean 30-year jumbo pass-throughs" is about 70 cents on the dollar.

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