SC 13D

Schedule 13D

Page 1 of 25

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. ______)*

THORNBURG MORTGAGE, INC.

(Name of Issuer)

COMMON STOCK, PAR VALUE $0.01 PER SHARE

(Title of Class of Securities)

885218107

(CUSIP Number)

Robert H. Weiss

General Counsel

MatlinPatterson Global Advisers LLC

520 Madison Avenue, 35th Floor

New York, New York 10022

Telephone:  (212) 230-9487

(Name, Address and Telephone Number of Person Authorized

to Receive Notices and Communications)

March 31, 2008

(Date of Event which Requires Filing of this Statement)

If the filing person has previously filed a statement on Schedule 13G to report the acquisition that is the subject of this Schedule 13D, and is filing this schedule because of §§240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check the following box. [  ]

Schedule 13D

Page 2 of 25

CUSIP No. 885218107
______________________________________________________________________________________________________
	1.	Name of Reporting Person I.R.S. Identification No.
		MP TMA LLC
______________________________________________________________________________________________________
	2.	Check the Appropriate Box if a Member of a Group
		(a)		[  ]
		(b)		[  ]  (See Introduction)
______________________________________________________________________________________________________
	3.	SEC Use Only
______________________________________________________________________________________________________
	4.	Source of Funds AF, WC
______________________________________________________________________________________________________
	5.	Check if Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e) [  ]
______________________________________________________________________________________________________
	6.	Citizenship or Place of Organization Delaware
______________________________________________________________________________________________________
Number of Shares Beneficially Owned by Each Reporting Person With				7.	Sole Voting Power 53,658,814
				________________________________________________________________________________________
				8.	Shared Voting Power 0
				________________________________________________________________________________________
				9.	Sole Dispositive Power 53,658,814
				________________________________________________________________________________________
				10.	Shared Dispositive Power 0
______________________________________________________________________________________________________
	11.		Aggregate Amount Beneficially Owned by Each Reporting Person 53,658,814
______________________________________________________________________________________________________
	12.		Check if the Aggregate Amount in Row (11) Excludes Certain Shares [  ]
______________________________________________________________________________________________________
	13.		Percent of Class Represented by Amount in Row (11) 15.8%  (See Item 5)
______________________________________________________________________________________________________
	14.		Type of Reporting Person   OO
______________________________________________________________________________________________________

Schedule 13D

Page 3 of 25

CUSIP No. 885218107
______________________________________________________________________________________________________
	1.	Name of Reporting Person I.R.S. Identification No.
		MP TMA (CAYMAN) LLC
______________________________________________________________________________________________________
	2.	Check the Appropriate Box if a Member of a Group
		(a)		[  ]
		(b)		[  ]  (See Introduction)
______________________________________________________________________________________________________
	3.	SEC Use Only
______________________________________________________________________________________________________
	4.	Source of Funds AF, WC
______________________________________________________________________________________________________
	5.	Check if Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e) [  ]
______________________________________________________________________________________________________
	6.	Citizenship or Place of Organization Delaware
______________________________________________________________________________________________________
Number of Shares Beneficially Owned by Each Reporting Person With				7.	Sole Voting Power 15,983,021
				________________________________________________________________________________________
				8.	Shared Voting Power 0
				________________________________________________________________________________________
				9.	Sole Dispositive Power 15,983,021
				________________________________________________________________________________________
				10.	Shared Dispositive Power 0
______________________________________________________________________________________________________
	11.		Aggregate Amount Beneficially Owned by Each Reporting Person 15,983,021
______________________________________________________________________________________________________
	12.		Check if the Aggregate Amount in Row (11) Excludes Certain Shares [  ]
______________________________________________________________________________________________________
	13.		Percent of Class Represented by Amount in Row (11) 4.7%  (See Item 5)
______________________________________________________________________________________________________
	14.		Type of Reporting Person   OO
______________________________________________________________________________________________________

Schedule 13D

Page 4 of 25

CUSIP No. 885218107
______________________________________________________________________________________________________
	1.	Name of Reporting Person I.R.S. Identification No.
		MatlinPatterson Global Opportunities Partners III L.P.
______________________________________________________________________________________________________
	2.	Check the Appropriate Box if a Member of a Group
		(a)		[  ]
		(b)		[  ]
______________________________________________________________________________________________________
	3.	SEC Use Only
______________________________________________________________________________________________________
	4.	Source of Funds AF, WC
______________________________________________________________________________________________________
	5.	Check if Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e) [  ]
______________________________________________________________________________________________________
	6.	Citizenship or Place of Organization Delaware
______________________________________________________________________________________________________
Number of Shares Beneficially Owned by Each Reporting Person With				7.	Sole Voting Power 0
				________________________________________________________________________________________
				8.	Shared Voting Power 53,658,814
				________________________________________________________________________________________
				9.	Sole Dispositive Power 0
				________________________________________________________________________________________
				10.	Shared Dispositive Power 53,658,814
______________________________________________________________________________________________________
	11.		Aggregate Amount Beneficially Owned by Each Reporting Person 53,658,814
______________________________________________________________________________________________________
	12.		Check if the Aggregate Amount in Row (11) Excludes Certain Shares [  ]
______________________________________________________________________________________________________
	13.		Percent of Class Represented by Amount in Row (11) 15.8%  (See Item 5)
______________________________________________________________________________________________________
	14.		Type of Reporting Person   PN
______________________________________________________________________________________________________

Schedule 13D

Page 5 of 25

CUSIP No. 885218107
______________________________________________________________________________________________________
	1.	Name of Reporting Person I.R.S. Identification No.
		MatlinPatterson Global Opportunities Partners (Cayman) III L.P.
______________________________________________________________________________________________________
	2.	Check the Appropriate Box if a Member of a Group
		(a)		[  ]
		(b)		[  ]  (See Introduction)
______________________________________________________________________________________________________
	3.	SEC Use Only
______________________________________________________________________________________________________
	4.	Source of Funds AF, WC
______________________________________________________________________________________________________
	5.	Check if Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e) [  ]
______________________________________________________________________________________________________
	6.	Citizenship or Place of Organization Cayman Islands
______________________________________________________________________________________________________
Number of Shares Beneficially Owned by Each Reporting Person With				7.	Sole Voting Power 0
				________________________________________________________________________________________
				8.	Shared Voting Power 15,983,021
				________________________________________________________________________________________
				9.	Sole Dispositive Power 0
				________________________________________________________________________________________
				10.	Shared Dispositive Power 15,983,021
______________________________________________________________________________________________________
	11.		Aggregate Amount Beneficially Owned by Each Reporting Person 15,983,021
______________________________________________________________________________________________________
	12.		Check if the Aggregate Amount in Row (11) Excludes Certain Shares [  ]
______________________________________________________________________________________________________
	13.		Percent of Class Represented by Amount in Row (11) 4.7%  (See Item 5)
______________________________________________________________________________________________________
	14.		Type of Reporting Person   PN
______________________________________________________________________________________________________

Schedule 13D

Page 6 of 25

CUSIP No. 885218107
______________________________________________________________________________________________________
	1.	Name of Reporting Person I.R.S. Identification No.
		MatlinPatterson Global Partners III LLC
______________________________________________________________________________________________________
	2.	Check the Appropriate Box if a Member of a Group
		(a)		[  ]
		(b)		[  ]
______________________________________________________________________________________________________
	3.	SEC Use Only
______________________________________________________________________________________________________
	4.	Source of Funds AF, WC
______________________________________________________________________________________________________
	5.	Check if Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e) [  ]
______________________________________________________________________________________________________
	6.	Citizenship or Place of Organization Delaware
______________________________________________________________________________________________________
Number of Shares Beneficially Owned by Each Reporting Person With				7.	Sole Voting Power 0
				________________________________________________________________________________________
				8.	Shared Voting Power 69,641,835
				________________________________________________________________________________________
				9.	Sole Dispositive Power 0
				________________________________________________________________________________________
				10.	Shared Dispositive Power 69,641,835
______________________________________________________________________________________________________
	11.		Aggregate Amount Beneficially Owned by Each Reporting Person 69,641,835
______________________________________________________________________________________________________
	12.		Check if the Aggregate Amount in Row (11) Excludes Certain Shares [  ]
______________________________________________________________________________________________________
	13.		Percent of Class Represented by Amount in Row (11) 20.5%  (See Item 5)
______________________________________________________________________________________________________
	14.		Type of Reporting Person   HC
______________________________________________________________________________________________________

Schedule 13D

Page 7 of 25

CUSIP No. 885218107
______________________________________________________________________________________________________
	1.	Name of Reporting Person I.R.S. Identification No.
		MatlinPatterson Global Advisers LLC
______________________________________________________________________________________________________
	2.	Check the Appropriate Box if a Member of a Group
		(a)		[  ]
		(b)		[  ]
______________________________________________________________________________________________________
	3.	SEC Use Only
______________________________________________________________________________________________________
	4.	Source of Funds AF, WC
______________________________________________________________________________________________________
	5.	Check if Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e) [  ]
______________________________________________________________________________________________________
	6.	Citizenship or Place of Organization Delaware
______________________________________________________________________________________________________
Number of Shares Beneficially Owned by Each Reporting Person With				7.	Sole Voting Power 0
				________________________________________________________________________________________
				8.	Shared Voting Power 69,641,835
				________________________________________________________________________________________
				9.	Sole Dispositive Power 0
				________________________________________________________________________________________
				10.	Shared Dispositive Power 69,641,835
______________________________________________________________________________________________________
	11.		Aggregate Amount Beneficially Owned by Each Reporting Person 69,641,835
______________________________________________________________________________________________________
	12.		Check if the Aggregate Amount in Row (11) Excludes Certain Shares [  ]
______________________________________________________________________________________________________
	13.		Percent of Class Represented by Amount in Row (11) 20.5%  (See Item 5)
______________________________________________________________________________________________________
	14.		Type of Reporting Person   IA
______________________________________________________________________________________________________

Schedule 13D

Page 8 of 25

CUSIP No. 885218107
______________________________________________________________________________________________________
	1.	Name of Reporting Person I.R.S. Identification No.
		MatlinPatterson Asset Management LLC
______________________________________________________________________________________________________
	2.	Check the Appropriate Box if a Member of a Group
		(a)		[  ]
		(b)		[  ]
______________________________________________________________________________________________________
	3.	SEC Use Only
______________________________________________________________________________________________________
	4.	Source of Funds AF, WC
______________________________________________________________________________________________________
	5.	Check if Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e) [  ]
______________________________________________________________________________________________________
	6.	Citizenship or Place of Organization Delaware
______________________________________________________________________________________________________
Number of Shares Beneficially Owned by Each Reporting Person With				7.	Sole Voting Power 0
				________________________________________________________________________________________
				8.	Shared Voting Power 69,641,835
				________________________________________________________________________________________
				9.	Sole Dispositive Power 0
				________________________________________________________________________________________
				10.	Shared Dispositive Power 69,641,835
______________________________________________________________________________________________________
	11.		Aggregate Amount Beneficially Owned by Each Reporting Person 69,641,835
______________________________________________________________________________________________________
	12.		Check if the Aggregate Amount in Row (11) Excludes Certain Shares [  ]
______________________________________________________________________________________________________
	13.		Percent of Class Represented by Amount in Row (11) 20.5%  (See Item 5)
______________________________________________________________________________________________________
	14.		Type of Reporting Person   HC
______________________________________________________________________________________________________

Schedule 13D

Page 9 of 25

CUSIP No. 885218107
______________________________________________________________________________________________________
	1.	Name of Reporting Person I.R.S. Identification No.
		MatlinPatterson LLC
______________________________________________________________________________________________________
	2.	Check the Appropriate Box if a Member of a Group
		(a)		[  ]
		(b)		[  ]
______________________________________________________________________________________________________
	3.	SEC Use Only
______________________________________________________________________________________________________
	4.	Source of Funds AF, WC
______________________________________________________________________________________________________
	5.	Check if Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e) [  ]
______________________________________________________________________________________________________
	6.	Citizenship or Place of Organization Delaware
______________________________________________________________________________________________________
Number of Shares Beneficially Owned by Each Reporting Person With				7.	Sole Voting Power 0
				________________________________________________________________________________________
				8.	Shared Voting Power 69,641,835
				________________________________________________________________________________________
				9.	Sole Dispositive Power 0
				________________________________________________________________________________________
				10.	Shared Dispositive Power 69,641,835
______________________________________________________________________________________________________
	11.		Aggregate Amount Beneficially Owned by Each Reporting Person 69,641,835
______________________________________________________________________________________________________
	12.		Check if the Aggregate Amount in Row (11) Excludes Certain Shares [  ]
______________________________________________________________________________________________________
	13.		Percent of Class Represented by Amount in Row (11) 20.5%  (See Item 5)
______________________________________________________________________________________________________
	14.		Type of Reporting Person   HC
______________________________________________________________________________________________________

Schedule 13D

Page 10 of 25

CUSIP No. 885218107
______________________________________________________________________________________________________
	1.	Name of Reporting Person I.R.S. Identification No.
		David J. Matlin
______________________________________________________________________________________________________
	2.	Check the Appropriate Box if a Member of a Group
		(a)		[  ]
		(b)		[  ]
______________________________________________________________________________________________________
	3.	SEC Use Only
______________________________________________________________________________________________________
	4.	Source of Funds AF, WC
______________________________________________________________________________________________________
	5.	Check if Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e) [  ]
______________________________________________________________________________________________________
	6.	Citizenship or Place of Organization United States
______________________________________________________________________________________________________
Number of Shares Beneficially Owned by Each Reporting Person With				7.	Sole Voting Power 0
				________________________________________________________________________________________
				8.	Shared Voting Power 69,641,835
				________________________________________________________________________________________
				9.	Sole Dispositive Power 0
				________________________________________________________________________________________
				10.	Shared Dispositive Power 69,641,835
______________________________________________________________________________________________________
	11.		Aggregate Amount Beneficially Owned by Each Reporting Person 69,641,835
______________________________________________________________________________________________________
	12.		Check if the Aggregate Amount in Row (11) Excludes Certain Shares [  ]
______________________________________________________________________________________________________
	13.		Percent of Class Represented by Amount in Row (11) 20.5%  (See Item 5)
______________________________________________________________________________________________________
	14.		Type of Reporting Person   IN
______________________________________________________________________________________________________

Schedule 13D

Page 11 of 25

CUSIP No. 885218107
______________________________________________________________________________________________________
	1.	Name of Reporting Person I.R.S. Identification No.
		Mark R. Patterson
______________________________________________________________________________________________________
	2.	Check the Appropriate Box if a Member of a Group
		(a)		[  ]
		(b)		[  ]
______________________________________________________________________________________________________
	3.	SEC Use Only
______________________________________________________________________________________________________
	4.	Source of Funds AF, WC
______________________________________________________________________________________________________
	5.	Check if Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e) [  ]
______________________________________________________________________________________________________
	6.	Citizenship or Place of Organization United States
______________________________________________________________________________________________________
Number of Shares Beneficially Owned by Each Reporting Person With				7.	Sole Voting Power 0
				________________________________________________________________________________________
				8.	Shared Voting Power 69,641,835
				________________________________________________________________________________________
				9.	Sole Dispositive Power 0
				________________________________________________________________________________________
				10.	Shared Dispositive Power 69,641,835
______________________________________________________________________________________________________
	11.		Aggregate Amount Beneficially Owned by Each Reporting Person 69,641,835
______________________________________________________________________________________________________
	12.		Check if the Aggregate Amount in Row (11) Excludes Certain Shares [  ]
______________________________________________________________________________________________________
	13.		Percent of Class Represented by Amount in Row (11) 20.5%  (See Item 5)
______________________________________________________________________________________________________
	14.		Type of Reporting Person   IN
______________________________________________________________________________________________________

Schedule 13D

Page 12 of 25

INTRODUCTION.

This Schedule 13D Statement (this “Statement”) is filed on behalf of (i) MP TMA LLC (“MP TMA”), a Delaware limited liability company, (ii) MP TMA (Cayman) LLC (“MP TMA (Cayman)”), a Delaware limited liability company, by virtue of being under common control with MP TMA, (iii) MatlinPatterson Global Opportunities Partners III L.P. (“Matlin Partners (Delaware)”), a Delaware limited partnership, as the holder of all of the membership interests in MP TMA, (iv) MatlinPatterson Global Opportunities Partners (Cayman) III L.P. (“Matlin Partners (Cayman)” and, together with Matlin Partners (Delaware), the “Matlin Partners”), a Cayman Islands limited partnership, as the holder of more than 99 percent of the membership interests in MP TMA (Cayman), (v) MatlinPatterson Global Advisers LLC (“Matlin Advisers”), a Delaware limited liability company, by virtue of its investment authority over securities held by each of the Matlin Partners, (vi) MatlinPatterson Global Partners III LLC (“Matlin Global Partners”), a Delaware limited liability company, as the general partner of each of the Matlin Partners, (vii) MatlinPatterson Asset Management LLC (“Matlin Asset Management”), a Delaware limited liability company, as the holder of all of the membership interests in each of Matlin Global Partners and Matlin Advisers, (viii) MatlinPatterson LLC (“MatlinPatterson”), a Delaware limited liability company, as the holder of all of the membership interests in Matlin Asset Management, (ix) David J. Matlin and Mark R. Patterson, each as a holder of 50% of the membership interests in MatlinPatterson. MP TMA, MP TMA (Cayman), Matlin Partners (Delaware), Matlin Partners (Cayman), Matlin Advisers, Matlin Global Partners, Matlin Asset Management, MatlinPatterson, David J. Matlin and Mark R. Patterson are collectively referred to in this Statement as the “Reporting Persons” and each is a “Reporting Person.”  The purpose of this Statement is to disclose the beneficial ownership of the Reporting Persons in the common stock, par value $0.01 per share (“Common Stock”), of Thornburg Mortgage, Inc. (the “Issuer”).

Item 1.  

Security and Issuer

The name of the Issuer is Thornburg Mortgage, Inc.  This Statement relates to the Common Stock.  The principal executive office of the Issuer is 150 Washington Avenue, Santa Fe, New Mexico, 87501.

Item 2.  

Identity and Background

The address of the principal office of each Reporting Person is:

c/o MatlinPatterson Global Advisers LLC

520 Madison Avenue, 35th Floor

New York, New York 10022

(i)  MP TMA is a limited liability company organized under the laws of Delaware.  MP TMA (Cayman) is a limited liability company organized under the laws of Delaware.  Each of MP TMA and MP TMA (Cayman) is in the business of investing in equity and debt securities of companies.

Schedule 13D

Page 13 of 25

(ii)  Matlin Partners (Delaware) is a limited partnership organized under the laws of Delaware.  Matlin Partners (Cayman) is a limited partnership organized under the laws of the Cayman Islands.  Each of Matlin Partners (Delaware) and Matlin Partners (Cayman) is in the business of investing in equity and debt securities of companies.

(iii)  Matlin Advisers is a limited liability company organized under the laws of Delaware.  The principal business of Matlin Advisers is to serve as investment adviser to each of Matlin Partners (Delaware) and Matlin Partners (Cayman).

(iv)  Matlin Global Partners is a limited liability company organized under the laws of Delaware.  The principal business of Matlin Global Partners is to serve as general partner of each of Matlin Partners (Delaware) and Matlin Partners (Cayman).  Matlin Global Partners holds the membership interests in MP TMA (Cayman) not held by Matlin Partners (Cayman).

(v)  Matlin Asset Management is a limited liability company organized under the laws of Delaware.  Matlin Asset Management is the holder of all the membership interests in each of Matlin Global Partners and Matlin Advisers.  Matlin Asset Management’s principal business is owning Matlin Global Partners and Matlin Advisers.

(vi) MatlinPatterson is a limited liability company organized under the laws of Delaware.  MatlinPatterson is the holder of all of the membership interests in Matlin Asset Management.  MatlinPatterson’s principal business is owning Matlin Asset Management.

(vii)  David J. Matlin and Mark R. Patterson each holds 50% of the membership interests in MatlinPatterson.  David J. Matlin’s principal occupation is acting as Chief Executive Officer of Matlin Advisers and Mark R. Patterson’s principal occupation is acting as Chairman of Matlin Advisers.  David J. Matlin and Mark R. Patterson are both citizens of the United States of America.

(viii)  In the past five years, none of the Reporting Persons have been (a) convicted in a criminal proceeding (other than traffic violations or similar misdemeanors) or (b) party to a civil proceeding of a judicial or administrative body of competent jurisdiction in which it was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, federal or state securities laws nor has it been found to have violated such laws.

The information set forth in the Introduction is hereby incorporated by reference herein.

Item 3.  

Source and Amount of Funds or Other Consideration

The funds used in connection with the Investment (as defined in Item 4) consisted of $475 million in investment funds, which were obtained by the Matlin Partners from capital commitments made by their partners.

Schedule 13D

Page 14 of 25

Item 4.  

Purpose of Transaction

On March 31, 2008, the Issuer entered into purchase agreements (the “Purchase Agreement”) with subscribers (collectively, the “Subscribers”), pursuant to which the Subscribers, including MP TMA, MP TMA (Cayman) and TMA LTD., a limited liability company organized under the laws of the Cayman Islands and, collectively with MP TMA and MP TMA (Cayman), the “Matlin Subscribers”, (a) purchased for an aggregate purchase price of $1.050 billion (1) $1.15 billion principal amount of the Issuer’s Senior Subordinated Secured Notes due 2015 (the “Notes”) and (2) 168,606,549 detachable warrants to purchase a like number of shares of Common Stock, (b) purchased a 100% participation (the “Participation”) in the principal payments received on the Issuer’s portfolio of mortgage securities and other assets constituting Collateral (as defined in the Override Agreement, dated March 17, 2008, among the Issuer, the other lien grantor party thereto, and the counterparties thereto, as amended on March 27, 2008 (the “Override Agreement”)) for an aggregate purchase price of $100 million and (c) excluding the Matlin Subscribers (such other subscribers, collectively, the “Escrow Subscribers”), deposited $200 million into escrow, and the Issuer escrowed 29,322,878 detachable warrants (the “Escrowed Warrants”) to purchase a like number of shares of Common Stock pursuant to an Escrow Agreement, dated March 31, 2008 among the Issuer, the Escrow Subscribers and Wilmington Trust Company, as Escrow Agent (the “Escrow Agreement”).  MP TMA and MP TMA (Cayman) acquired 53,658,814 and 15,983,021, respectively, of the 168,606,549 warrants and $475 million principal amount of Notes and TMA LTD. acquired 41.3% of the Participation.  All of the warrants referred to above (the “Warrants”) have an exercise price of $0.01 per share.  If the Triggering Event (as defined below) occurs on or prior to June 30, 2008, then the Escrow Subscribers shall purchase up to $200 million aggregate principal amount of Notes, pro rata, in the amount necessary to pay the cash consideration payable in the Tender Offer (as defined below), and they shall receive their pro rata share of the Escrowed Warrants.  Escrowed Warrants that are not distributed to Escrow Subscribers on or prior to June 30, 2008 shall be distributed to all Subscribers pro rata according to the principal amount of the Notes purchased by them on March 31, 2008 and on any second closing date.

If the Triggering Event occurs at any time, the holders of Participations and the Escrow Subscribers shall receive warrants to purchase, at a price of $0.01 per share, shares of Common Stock (the “Additional Warrants”) equal to a number of shares representing, together with the shares underlying the Warrants, 90% of the shares of Common Stock outstanding on a fully-diluted basis after giving effect to such issuance and all anti-dilution adjustments in all existing instruments and agreements of the Issuer (but excluding and less any additional shares of Common Stock issuable under warrants granted in connection with the Tender Offer), and representing 87.8% of the fully-diluted shares of Common Stock after giving effect to the issuance in the Tender Offer of the maximum number of warrants referred to in the next paragraph, pro rata (according to their Notes principal amount, in the case of the Escrow Subscribers, and according to their holdings of Participations, in the case of holders of Participations).

The “Tender Offer” is the Issuer’s exchange offers for a least 90% of the aggregate liquidation preference of its outstanding preferred stock and at least 66-2/3% of the aggregate liquidation preference of each series of its outstanding preferred stock, at a price of $5 per $25 of liquidation preference plus (i) if Shareholder Approval (as defined below) is obtained, warrants to purchase

Schedule 13D

Page 15 of 25

an aggregate of 5% of the Common Stock outstanding on a fully-diluted basis after giving effect to such issuance and all anti-dilution adjustments under all existing instruments and agreements (other than the Warrants and Additional Warrants).  The “Shareholder Approval” is the affirmative vote of the stockholders of the Issuer approving an amendment to the Issuer’s certificate of corporation increasing the number of authorized shares of Common Stock to 4 billion.  The “Triggering Event” is when: (i) the Tender Offer shall have been completed as described above or as otherwise consented to in writing by holders of a majority of the Participations (the “Majority Participants”), (ii) the Shareholder Approval shall have been received by June 15, 2008 (or such later date consented to in writing by the Majority Participants, together with the opinion of Maryland counsel to the Issuer delivered to the Subscribers as to the effectiveness of the increase in the number of authorized shares and (iii) the Participations shall have been terminated.  

Warrants and Additional Warrants are and will be subject to the Warrant Agreement, dated March 31, 2008, between the Issuer and the warrantholders party thereto (the “Warrant Agreement”).  All Warrants and Additional Warrants must be exercised as promptly as practicable after April 11, 2008 and from time to time thereafter to the extent permitted by applicable law.  The number of shares of Common Stock issuable upon exercise of Warrants and Additional Warrants will be adjusted in certain circumstances.  The holders of shares of Common Stock issued upon exercise of Warrants and Additional Warrants are entitled to unlimited piggyback and unlimited demand registration rights (including the right to demand one or more shelf registration statements) on the terms set forth in the Warrant Agreement.

In the Warrant Agreement the Issuer agreed (i) to cause the Issuer’s Board of Directors to consist of 10 directors on March 31, 2008 subject to future increase or decrease in accordance with the Issuer’s By-Laws and the Warrant Agreement, (ii) that for so long as MP TMA and MP TMA (Cayman) and affiliates beneficially own unexercised Warrants or shares of Common Stock representing (a) at least 5% but less than 10% of the shares of Common Stock outstanding on a fully-diluted basis, they may designate one director, (b) at least 10% but less than 15% of the shares of Common Stock outstanding on a fully-diluted basis, they may designate two directors, and (c) at least 15% of the shares of Common Stock outstanding on a fully-diluted basis, they may designate three directors and (iii) the Issuer shall appoint to its Board of Directors at least two directors designated by warrantholders other than Matlin subscribers.  Designated directors may be removed at the request of the designating warrantholder or for cause, and the designating warrant holder may appoint his or her replacement.

Pursuant to a Principal Participation Agreement, dated as of March 31, 2008 (the “Principal Participation Agreement”), between the Issuer and the Subscribers party thereto (the “Participants”), the Issuer sold to each Participant a Participation consisting of an undivided interest subject to satisfaction in full of the obligations under the Override Agreement and the Financing Agreements (as defined in the Override Agreement) or any refinancing thereof approved by the Majority Participants in (i) the then unpaid principal amount of the scheduled assets and the Issuer’s rights under any repurchase agreements, reverse repurchase agreements, swaps, loan agreements and other agreements to which the Issuer is a party relating to the foregoing and (ii) all claims, suits, causes of action and any other right of the Issuer against anyone obligated to pay the foregoing assets referenced in clause (i) or based thereon or related

Schedule 13D

Page 16 of 25

thereto.  Such amounts, minus any amounts to be paid with respect to the Override Agreement, each Financing Agreement and all other transactions in effect on March 31, 2008 or any refinancing approved by the Majority Participants, to be paid on the last business day of each month.  The Override Agreement blocks any such payments while it is in force.

The Participation Agreement shall terminate on the occurrence of a Triggering Event (provided the Issuer has issued to each Participant its pro rata share of the Additional Warrants) or on the seventh anniversary of March 31, 2008 (on which seventh anniversary the Issuer shall pay to the Participants the pro rata share of the fair market value of the remaining unpaid amounts set forth in clause (i) of the preceding paragraph, after deducting amounts required to be paid in respect of repurchase agreements or other transactions in effect as of the date hereof or any refinancing approved by the Majority Participants).  All payments to be made without right of set-off, counterclaim or deduction.  The Issuer may not transfer the Assets below par, except to continue to finance it in the ordinary course of business consistent with past practice, so long as refinancing of all or substantially all of the obligations covered by the Override Agreement must be approved by the Majority Participants.

An initial $1,150,000,000 aggregate principal amount of Notes, which can be increased by up to an additional $200,000,000 aggregate principal amount upon the occurrence of the Triggering Event at any time, were issued under an Indenture, dated March 31, 2008 among the Issuer, the note guarantors party thereto and Wilmington Trust Company, as Trustee (the “Indenture”).

The Notes bear interest at a rate of 18.00% per annum, except that upon the occurrence of a Triggering Event, the interest payable on the Notes would decrease to 12.00% per annum (the “Interest Rate Change”).  Upon an Interest Rate Change, all unpaid interest accrued at a rate in excess of 12.00% would be canceled.  The interest rate on the Notes will increase if there the Issuer and the guarantors fail to complete an exchange offer or a shelf registration with respect to the Notes as described below.

The Notes are subordinated to all senior indebtedness of the Issuer (except that the Issuer and the guarantors may not issue any indebtedness ranking senior or pari passu to the Notes or the guarantees thereof, respectively).  The Notes and the guarantees thereof are secured (together with, but subordinate to, the Issuer’s 8% Senior Notes due 2013 (the “Senior Notes”)) pursuant to the Security Agreement, dated March 31, 2008, among the Issuer and certain of its subsidiaries, and Wilmington Trust Company, as Note Lien Collateral Agent.  The Senior Notes are secured pursuant to the Security Agreement, dated March 31, 2008, among the Issuer and the same subsidiaries, and Deutsche Bank Trust Issuer Americas (collectively, the “Security Agreements”).

Pursuant to a Registration Rights Agreement, dated March 31, 2008, among the Issuer, the guarantors and the Subscribers (the “Registration Rights Agreement”), the Issuer and the guarantors must use their reasonable best efforts to (i) cause to be filed an exchange offer registration statement covering an offer to the holders of Notes to exchange all the Notes for exchange Notes and (ii) have such registration statement remain effective until 180 days after the last date of acceptance for exchange for use by one or more broker-dealers that receives exchange Notes for its own account.  If (i) the exchange offer registration statement is determined not to be available or if it may not be completed as soon as practicable after the last

Schedule 13D

Page 17 of 25

date of acceptance for exchange because it would violate any applicable law or applicable interpretations of the Staff of the SEC, (ii) the exchange offer is not for any other reason completed by July 28, 2008 or (iii) upon written request of any Subscriber which holds Notes that are ineligible to be exchanged in the exchange offer, the Issuer and the guarantors must use their reasonable best efforts to cause to be filed as soon as practicable a shelf registration statement and to have such shelf registration statement become effective.  In the event that either the exchange offer is not completed or the shelf registration statement required pursuant to clauses (i) or (ii) above does not become effective by July 28, 2008, the interest rate on the unregistered Notes will be increased by 1.00% per annum until the exchange offer is completed or the shelf registration statement becomes effective. If a Subscriber requests in writing a shelf registration statement to be filed pursuant to clause (iii) above, the interest rate on the unregistered Notes will increase by 1.00% per annum unless the shelf registration statement becomes effective by the later of (x) July 28, 2008 or (y) 30 days after the delivery of such request.

On March 31, 2008, Thornburg Mortgage Advisory Corporation, a Delaware corporation (the “Manager”) that manages the operations of the Issuer, and certain stockholders of the Manager signed a Participation Agreement, dated as of March 31, 2008, with MP TMAC LLC (the “TMAC Participation Agreement”) whereby MP TMAC LLC shall acquire a 75% participation (the “Participation”) in certain fees and other compensation paid to the Manager by the Issuer under the management agreement between the Issuer and the Manager (the “Management Agreement”) and in consideration for the Participation, the Participant shall grant the Manager an option (the “Option”) to acquire an aggregate of 2.5264% of the fully-diluted authorized and issued shares of Common Stock (not to exceed 78,113,785 shares of Common Stock) for an exercise price of $0.01 per share. The Option will be exercisable upon and from time to time after the Triggering Event. The Manager agreed to transfer the Option to the counterparties signatories to the Override Agreement.  MP TMAC LLC shall offer each other Subscriber (other than its affiliates) the opportunity to participate on the same terms and conditions as MP TMAC LLC in the Participation on a pro rata basis based on the amount of such Subscriber’s total investment under the Purchase Agreement over $1.35 billion.

So long as MP TMAC LLC (or any other participant) and its affiliates holds 30% of the Participation (a “Major Participant”), the prior written consent of such participant shall be required before the Manager may enter into, amend, modify, supplement or terminate, or waive any provision under, any material contract of the Manager, including without limitation the Management Agreement, any employment agreement or other contracts relating to employees of the Manager, or other contracts relating to the Issuer.  A Major Participant may request the Manager’s Board of Directors to take any action or refrain from taking any action with respect to any matter pertaining to the Manager, on the one hand, and either the Issuer or any current or prospective employee, consultant or adviser of the Manager, on the other hand.  If the Board of Directors of the Manager (or, as the case may be, the stockholders of the Manager signatories to the participation agreement) shall unreasonably fail to implement such a request in a timely manner, then the Major Participant which made the request shall have the right to elect to designate up to a majority of the members of the Manager’s Board of Directors.

If a participant and its affiliates cease to beneficially own any securities of the Issuer, then the Manager may elect in writing within 30 days of its knowledge of such event to purchase all but

Schedule 13D

Page 18 of 25

not less than all of such participant’s Participation at the fair market value thereof (mutually agreed upon in good faith by the participant and the Manager’s Board of Directors) within 90 days of the delivery of the election to purchase.

The foregoing descriptions of the Purchase Agreement, Override Agreement, Escrow Agreement, Warrant Agreement, Principal Participation Agreement, Indenture, Security Agreements and TMAC Participation Agreement do not purport to be complete and are qualified in their entirety by reference to the full text of the Purchase Agreement (filed as Exhibit 2 hereto), Override Agreement (filed as Exhibit 3 hereto), Escrow Agreement (filed as Exhibit 4 hereto), Warrant Agreement (filed as Exhibit 5 hereto), Principal Participation Agreement (filed as Exhibit 6 hereto), Indenture (filed as Exhibit 7 hereto), Security Agreements (filed as Exhibits 8 and 9 hereto), Registration Rights Agreement (filed as Exhibit 10 hereto) and TMAC Participation Agreement (filed as Exhibit 11 hereto), each of which is incorporated herein by this reference in its entirety.

Item 5.  

Interest in Securities of the Issuer

(a)-(b)  As set forth above in Item 4, on March 31, 2008, the Issuer issued 168,606,549 Warrants and escrowed another 29,322,878 Warrants.  The Reporting Persons collectively acquired 69,641,835 of the 168,606,549 Warrants.  According to information supplied by the Issuer to the Matlin Subscribers, 171,530,778 shares of Common Stock were outstanding as of March 6, 2008.  Based on the foregoing and assuming the exercise of all 168,606,549 Warrants issued on March 31, 2008, the Reporting Persons would beneficially own 20.5% of the shares of Common Stock then outstanding.  If you assume that only Warrants owned by the Reporting Persons are exercised, the Reporting Persons would own 28.9% of the shares then outstanding.  As set forth in Item 4, all Warrants must be exercised as promptly as practicable after April 11, 2008 and from time to time thereafter to the extent permitted by applicable law.  Also as set forth in Item 4, the timing of the issuance of Escrowed Warrants and Additional Warrants, and the identities of the persons to whom the Escrowed Warrants and Additional Warrants will be distributed to, each is contingent upon future events.

Each of the Matlin Partners (Delaware), as the sole member of MP TMA, and Matlin Partners (Cayman), as the member that holds more than 99 percent of the membership interests in MP TMA (Cayman), has the power to vote or to direct the vote, and to dispose or to direct the disposition, of the shares of Common Stock beneficially owned by MP TMA and MP TMA (Cayman), respectively.  Matlin Advisers, as the Investment Adviser of the Matlin Partners, has the power to vote or to direct the vote, and to dispose or to direct the disposition, of the shares of Common Stock beneficially owned by MP TMA and MP TMA (Cayman).  Matlin Global Partners, as the general partner of each of the Matlin Partners, has the power to vote or to direct the vote, and to dispose or to direct the disposition, of the shares of Common Stock beneficially owned by MP TMA and MP TMA (Cayman).  Each of Matlin Asset Management, as the sole member of each of Matlin Advisers and Matlin Global Partners, MatlinPatterson, as the sole member of Matlin Asset Management, and Messrs. Matlin and Patterson, each a holder of 50 percent of the membership interests in MatlinPatterson, has the power to vote or to direct the vote, and to dispose or to direct the disposition, of the shares of Common Stock beneficially owned by MP TMA and MP TMA (Cayman).  As a result, each of the Matlin Partners, Matlin Advisers, Matlin Global Partners, Matlin Asset Management, MatlinPatterson and Messrs.

Schedule 13D

Page 19 of 25

Matlin and Patterson may be deemed to beneficially own the shares of Common Stock directly owned by MP TMA and MP TMA (Cayman).   The filing of this Schedule 13D shall not be construed as an admission that any of the Matlin Partners, Matlin Advisers, Matlin Global Partners, Matlin Asset Management, MatlinPatterson or Messrs. Matlin and Patterson are the beneficial owner of any securities covered by this statement.

(c) Except as disclosed in this Statement, none of the Reporting Persons has effected any transaction in Common Stock during the past 60 days.

(d)  Not applicable

(e)  Not applicable

The filing of this Statement shall not be construed as an admission by any of the Reporting Persons that it or he is, for the purposes of Section 13(d) of the Exchange Act, the beneficial owner of shares of Common Stock owned by other parties.

The information set forth or incorporated by reference into Items 2 and 4 is hereby incorporated by reference herein.

Item 6.  

Contracts, Arrangements, Understandings or Relationships with Respect to Securities of the Issuer

Pursuant to a letter agreement, dated March 31, 2008, between MP TMA and MP TMA (Cayman) and the counterparties to the Override Agreement, MP TMA and MP TMA (Cayman) agreed (a) to exercise its Warrants issued on March 31, 2008 as promptly as practicable and to the extent permitted by the terms of the Warrant Agreement and applicable federal, state and foreign laws and regulations, (b) to vote all of the shares of Common Stock held by it on the record date for the meeting of the shareholders of the Company to vote on an amendment to the Company’s charter increasing the number of authorized shares of Common Stock that the Company may issue to at least 4,000,000,000 shares in favor of such amendment and (c) that it shall not transfer any shares of Common Stock prior to June 30, 2008 unless the transferee agrees in writing to be bound by the terms of this letter agreement.  The foregoing description of the letter agreement does not purport to be complete and is qualified in its entirety by reference to the full text thereof (filed as Exhibit 12 hereto), which is incorporated herein by this reference in its entirety.

The information set forth in Item 4 is hereby incorporated by reference herein.

Schedule 13D

Page 20 of 25

Item 7.  

Material to Be Filed as Exhibits

Exhibit

Description

1.

Joint Filing Agreement, dated as of April 9, 2008, among the Reporting Persons.

2.

Purchase Agreement, dated as of March 31, 2008, among Thornburg Mortgage, Inc. and the Subscribers party thereto (filed as Exhibit 10.3 to Thornburg Mortgage, Inc’s Current Report on Form 8-K/A dated April 4, 2008, and hereby incorporated herein by reference).

3.

Override Agreement, dated March 17, 2008, among Thornburg Mortgage, Inc., the other lien grantor party thereto, and the counterparties thereto, as amended on March 27, 2008 (Override Agreement filed as Exhibit 10.1 to Thornburg Mortgage, Inc.’s Current Report on Form 8-K dated March 19, 2008 and Amendment No. 1 thereto filed as Exhibit 10.1 to Thornburg Mortgage, Inc’s Current Report on Form 8-K/A dated April 4, 2008, and each hereby incorporated herein by reference).

4.

Escrow Agreement, dated March 31, 2008, among Thornburg Mortgage, Inc., the Escrow Subscribers and Wilmington Trust Company, as Escrow Agent (filed as Exhibit 10.10 to Thornburg Mortgage, Inc’s Current Report on Form 8-K/A dated April 4, 2008, and hereby incorporated herein by reference).

5.

Warrant Agreement, dated as of March 31, 2008, among Thornburg Mortgage, Inc. and the warrantholders party thereto (filed as Exhibit 10.5 to Thornburg Mortgage, Inc’s Current Report on Form 8-K/A dated April 4, 2008, and hereby incorporated herein by reference).

6.

Principal Participation Agreement, dated as of March 31, 2008, among Thornburg Mortgage, Inc. and the Participants party thereto (filed as Exhibit 10.6 to Thornburg Mortgage, Inc’s Current Report on Form 8-K/A dated April 4, 2008, and hereby incorporated herein by reference).

7.

Indenture relating to the Senior Subordinated Secured Notes of Thornburg Mortgage, Inc. due 2015, dated March 31, 2008, among Thornburg Mortgage, Inc., the Note Guarantors party thereto and Wilmington Trust Company, as Trustee (filed as Exhibit 4.1 to Thornburg Mortgage, Inc’s Current Report on Form 8-K/A dated April 4, 2008, and hereby incorporated herein by reference).

8.

Security Agreement relating to the Senior Subordinated Secured Notes, dated March 31, 2008, among Thornburg Mortgage, Inc. and certain of its subsidiaries, and Wilmington Trust Company, as Note Lien Collateral Agent (filed as Exhibit 10.8 to Thornburg Mortgage, Inc’s Current Report on Form 8-K/A dated April 4, 2008, and hereby incorporated herein by reference).

9.

Security Agreement relating to the Senior Notes, dated March 31, 2008, among Thornburg Mortgage, Inc. and certain of its subsidiaries, and Deutsche Bank Trust Company Americas, as Note Lien Collateral Agent (filed as Exhibit 10.9 to Thornburg

Schedule 13D

Page 21 of 25

Mortgage, Inc’s Current Report on Form 8-K/A dated April 4, 2008, and hereby incorporated herein by reference).

10.

Registration Rights Agreement, dated March 31, 2008, among Thornburg Mortgage, Inc., the guarantors party thereto and the Subscribers party thereto (filed as Exhibit 10.4 to Thornburg Mortgage, Inc’s Current Report on Form 8-K/A dated April 4, 2008, and hereby incorporated herein by reference).

11.

Participation Agreement, dated as of March 31, 2008, by and among Thornburg Mortgage Advisory Corporation, MP TMAC LLC and certain stockholders of Thornburg Mortgage Advisory Corporation.

12.

Letter Agreement, dated March 31, 2008, between MP TMA LLC and MP TMA (Cayman) LLC and the Counterparties to the Override Agreement.

Schedule 13D

Page 22 of 25

SIGNATURES

After reasonable inquiry and to the best of our knowledge and belief, we certify that the information set forth in this Statement is true, complete and correct.

Dated:  April 9, 2008

Signatures: MP TMA LLC By:­ /s/ Robert A. Weiss                                        Name:  Robert A. Weiss Title:

MP TMA (CAYMAN) LLC

By:­

/s/ Robert A. Weiss                                       

Name:  Robert A. Weiss

Title:

MATLINPATTERSON GLOBAL OPPORTUNITIES PARTNERS III L.P.

By:  MATLINPATTERSON GLOBAL ADVISERS LLC, its Investment Adviser

By:­

/s/ Lawrence M. Teitelbaum                       

Name:  Lawrence M. Teitelbaum

Title:  Chief Financial Officer

MATLINPATTERSON GLOBAL OPPORTUNITIES PARTNERS (CAYMAN) III L.P.

By:  MATLINPATTERSON GLOBAL ADVISERS LLC, its Investment Adviser

By:­­

/s/ Lawrence M. Teitelbaum                       

Name:  Lawrence M. Teitelbaum

Title:  Chief Financial Officer

MATLINPATTERSON GLOBAL PARTNERS III LLC

By:­

/s/ Lawrence M. Teitelbaum                       

Name:  Lawrence M. Teitelbaum

Title:  Chief Financial Officer

Schedule 13D

Page 23 of 25

MATLINPATTERSON GLOBAL ADVISERS LLC

By:­

/s/ Lawrence M. Teitelbaum                       

Name:  Lawrence M. Teitelbaum

Title:  Chief Financial Officer

MATLINPATTERSON ASSET MANAGEMENT LLC

By:  MATLINPATTERSON LLC, its Manager

By:­

/s/ David J. Matlin                                       

Name:  David J. Matlin

Title:  Member

MATLINPATTERSON LLC

By:­

/s/ David J. Matlin                                       

Name:  David J. Matlin

Title:  Member

DAVID J. MATLIN

By:

/s/ David J. Matlin                                       

Name:  David J. Matlin

MARK R. PATTERSON

By:

/s/ Mark R. Patterson                                   

Name:  Mark R. Patterson

Schedule 13D

Page 24 of 25

EXHIBIT INDEX

1.  Joint Filing Agreement, dated as of April 9, 2008, among the Reporting Persons.

2.  Purchase Agreement, dated as of March 31, 2008, among Thornburg Mortgage, Inc. and the Subscribers party thereto (filed as Exhibit 10.3 to Thornburg Mortgage, Inc’s Current Report on Form 8-K/A dated April 4, 2008, and hereby incorporated herein by reference).

3.  Override Agreement, dated March 17, 2008, among Thornburg Mortgage, Inc., the other lien grantor party thereto, and the counterparties thereto, as amended on March 27, 2008 (Override Agreement filed as Exhibit 10.1 to Thornburg Mortgage, Inc.’s Current Report on Form 8-K dated March 19, 2008 and Amendment No. 1 thereto filed as Exhibit 10.1 to Thornburg Mortgage, Inc’s Current Report on Form 8-K/A dated April 4, 2008, and each hereby incorporated herein by reference).

4.  Escrow Agreement, dated March 31, 2008, among Thornburg Mortgage, Inc., the Escrow Subscribers and Wilmington Trust Company, as Escrow Agent (filed as Exhibit 10.10 to Thornburg Mortgage, Inc’s Current Report on Form 8-K/A dated April 4, 2008, and hereby incorporated herein by reference).

5.  Warrant Agreement, dated as of March 31, 2008, among Thornburg Mortgage, Inc. and the warrantholders party thereto (filed as Exhibit 10.5 to Thornburg Mortgage, Inc’s Current Report on Form 8-K/A dated April 4, 2008, and hereby incorporated herein by reference).

6.  Principal Participation Agreement, dated as of March 31, 2008, among Thornburg Mortgage, Inc. and the Participants party thereto (filed as Exhibit 10.6 to Thornburg Mortgage, Inc’s Current Report on Form 8-K/A dated April 4, 2008, and hereby incorporated herein by reference).

7.  Indenture relating to the Senior Subordinated Secured Notes of Thornburg Mortgage, Inc. due 2015, dated March 31, 2008, among Thornburg Mortgage, Inc., the Note Guarantors party thereto and Wilmington Trust Company, as Trustee (filed as Exhibit 4.1 to Thornburg Mortgage, Inc’s Current Report on Form 8-K/A dated April 4, 2008, and hereby incorporated herein by reference).

8.  Security Agreement relating to the Senior Subordinated Secured Notes, dated March 31, 2008, among Thornburg Mortgage, Inc. and certain of its subsidiaries, and Wilmington Trust Company, as Note Lien Collateral Agent (filed as Exhibit 10.8 to Thornburg Mortgage, Inc’s Current Report on Form 8-K/A dated April 4, 2008, and hereby incorporated herein by reference).

9.  Security Agreement relating to the Senior Notes, dated March 31, 2008, among Thornburg Mortgage, Inc. and certain of its subsidiaries, and Deutsche Bank Trust Company Americas, as Note Lien Collateral Agent (filed as Exhibit 10.9 to Thornburg Mortgage, Inc’s Current Report on Form 8-K/A dated April 4, 2008, and hereby incorporated herein by reference).

Schedule 13D

Page 25 of 25

10.  Registration Rights Agreement, dated March 31, 2008, among Thornburg Mortgage, Inc., the guarantors party thereto and the Subscribers party thereto (filed as Exhibit 10.4 to Thornburg Mortgage, Inc’s Current Report on Form 8-K/A dated April 4, 2008, and hereby incorporated herein by reference).

11.  Participation Agreement, dated as of March 31, 2008, by and among Thornburg Mortgage Advisory Corporation, MP TMAC LLC and certain stockholders of Thornburg Mortgage Advisory Corporation.

12.  Letter Agreement, dated March 31, 2008, between MP TMA LLC and MP TMA (Cayman) LLC and the Counterparties to the Override Agreement.

EX-1

Exhibit 1

JOINT FILING AGREEMENT

In accordance with Rule 13d-1(k)(1) under the Securities Exchange Act of 1934, as amended, the undersigned hereby agree to the joint filing of MP TMA LLC, MP TMA (Cayman) LLC, MatlinPatterson Global Opportunities Partners III L.P., MatlinPatterson Global Opportunities Partners (Cayman) III L.P., MatlinPatterson Global Partners III LLC, MatlinPatterson Global Advisers LLC, MatlinPatterson Asset Management LLC, MatlinPatterson LLC, David J. Matlin and Mark R. Patterson, on behalf of each of them a statement on Schedule 13D (including amendments thereto) with respect to shares of common stock, par value $0.01 per share, of Thornburg Mortgage, Inc., a Maryland corporation, and that this Agreement be included as an Exhibit to such joint filing.  This Agreement may be executed in any number of counterparts all of which taken together shall constitute one and the same instrument.

IN WITNESS WHEREOF, the undersigned hereby execute this Agreement this 9th day of April 2008.

Signatures:	MP TMA LLC By:­ /s/ Robert A. Weiss                                        Name:  Robert A. Weiss Title:
	MP TMA (CAYMAN) LLC By:­ /s/ Robert A. Weiss                                        Name:  Robert A. Weiss Title:
	MATLINPATTERSON GLOBAL OPPORTUNITIES PARTNERS III L.P. By:  MATLINPATTERSON GLOBAL ADVISERS LLC, its Investment Adviser By:­ /s/ Lawrence M. Teitelbaum                        Name:  Lawrence M. Teitelbaum Title:  Chief Financial Officer

2

MATLINPATTERSON GLOBAL OPPORTUNITIES PARTNERS (CAYMAN) III L.P.

By:  MATLINPATTERSON GLOBAL ADVISERS LLC, its Investment Adviser

By:­

/s/ Lawrence M. Teitelbaum                       

Name:  Lawrence M. Teitelbaum

Title:  Chief Financial Officer

MATLINPATTERSON GLOBAL PARTNERS III LLC

By:­

/s/ Lawrence M. Teitelbaum                       

Name:  Lawrence M. Teitelbaum

Title:  Chief Financial Officer

MATLINPATTERSON GLOBAL ADVISERS LLC

By:­

/s/ David J. Matlin                                       

Name:  David J. Matlin

Title:  Chief Executive Officer

MATLINPATTERSON ASSET MANAGEMENT LLC

By:  MATLINPATTERSON LLC, its Manager

By:­

/s/ David J. Matlin                                       

Name:  David J. Matlin

Title:  Member

MATLINPATTERSON LLC

By:­

/s/ David J. Matlin                                       

Name:  David J. Matlin

Title:  Member

DAVID J. MATLIN

By:­

/s/ David J. Matlin                                       

Name:  David J. Matlin

MARK R. PATTERSON

By:­

/s/ Mark R. Patterson                                   

Name:  Mark R. Patterson

EX-11

Execution Copy

PARTICIPATION AGREEMENT

This PARTICIPATION AGREEMENT (this “Agreement”), dated as of March 31, 2008, is made by and between THORNBURG MORTGAGE ADVISORY CORPORATION, a Delaware corporation (the “Manager”), H. GARRETT THORNBURG, JR. (“GT”), individually and as trustee of the LLOYD THORNBURG SUBCHAPTER S TRUST, the IRREVOCABLE TRUST FOR THE BENEFIT OF THE DESCENDENTS OF H. GARRETT THORNBURG, JR. and the 2002 THORNBURG CHILDREN’S TRUST (collectively, the “GT Trusts”), and LARRY A. GOLDSTONE (“LG”), individually (together with GT, the GT Trusts and LG, the “Principal Stockholders”), MP TMAC LLC (the initial “Participant”; together with any Participant Affiliated (as defined in Section 1.1 hereof) with the initial Participant, “MatlinPatterson”) and each other Person (as defined in Section 1.1 hereof) w ho subsequently becomes a Participant hereunder (the initial Participant and such other Persons, collectively, the “Participants”).  

WHEREAS, the Manager is engaged in the business (the “Business”) of managing the assets and operations of Thornburg Mortgage, Inc. (“TMA”) and performing administration services for TMA in the manner and on the terms set forth in the Amended and Restated Management Agreement, dated as of July 1, 2004, by and between TMA and Manager (as amended by Amendment No. 1 to Amended and Restated Management Agreement dated March 27, 2008, the “Management Agreement”).  

NOW, THEREFORE, in consideration of the foregoing and the mutual agreements contained herein, and for other good and valuable consideration, the value, receipt and sufficiency of which are acknowledged, the Parties hereby agree as follows:

ARTICLE I
DEFINITIONS

Section 1.1

Definitions.  For purposes of this Agreement, the following terms have the meanings set forth below:

“Action” means any claim, action, charge, suit, arbitration, inquiry, proceeding or investigation by or before or otherwise involving any Governmental Entity or arbitrator.  

“Affiliates” has the meaning set forth in Rule l2b-2 of the regulations promulgated under the Securities Exchange Act of 1934, as amended.

“Agreement” has the meaning set forth in the Preamble.

“Board” has the meaning set forth in Section 6.4.

“Business” has the meaning set forth in the Recitals.

“Business Day” means any day that is not a Saturday, Sunday or any other day on which banks are required or authorized by Law to be closed in New York City, New York.

“Closing” has the meaning set forth in Section 3.1.

“Closing Date” has the meaning set forth in Section 3.1.

“Contracts” means any contracts, agreements, arrangements, real property leases, personal property leases, obligations, commitments and undertakings, whether written or oral, express or implied.

“Counterparties” has the meaning set forth in Section 2.3(b).

“Governmental Entity” means the United States, any state or other political subdivision thereof, and any other foreign, supranational or domestic entity exercising executive, legislative, judicial, regulatory or administrative authority or functions of or pertaining to government, including any government authority, agency, department, corporation, board, commission, court, tribunal or instrumentality of the United States or any foreign or supranational entity, any state of the United States or any political subdivision of any of the foregoing.

“GT” has the meaning set forth in the Preamble.

“GT Trusts” has the meaning set forth in the Preamble.

“Law” means any applicable United States or non-United States federal, provincial, state or local statute, common law, rule, treaty, regulation, ordinance, permit, order, writ, injunction, directive, judgment or decree of any arbitrator or Governmental Entity.

“LG” has the meaning set forth in the Preamble.

“Lien” means any mortgage, deed of trust, restriction, hypothecation, easement, lease or sublease, license or sublicense, right of any third party, right of way, encroachment or other matter of title, conditional sales agreement, trust or title retention agreement, option, pledge, security interest, charge, claim or other lien, restriction or encumbrance of any kind.

“Major Participant” has the meaning set forth in Section 6.1.

“Major Participant Designees” has the meaning set forth in Section 6.4.

“Management Agreement” has the meaning set forth in the Recitals.

“Manager” has the meaning set forth in the Preamble.

“Manager’s Knowledge” means the actual knowledge, after reasonable inquiry, of GT and LG.

“Material Adverse Effect” means a material adverse effect on the Business or to the condition (financial or otherwise), business, net assets, or results of operations of the Business.

“MatlinPatterson” has the meaning set forth in the Preamble.

“Option” has the meaning set forth in Section 2.2.

“Participation” has the meaning set forth in Section 2.2(a).

2

“Participant” has the meaning set forth in the Preamble.

“Participant Material Adverse Effect” has the meaning set forth in Section 5.1.

“Participation” has the meaning set forth in Section 2.1.

“Parties” means the Manager, the Principal Stockholders and the Participant together, and “Party” means any of the foregoing, as the case may be.

“Person” means an individual, partnership, corporation, limited liability company, association, joint stock company, trust, joint venture, unincorporated organization or Governmental Entity.

“Principal Stockholders” has the meaning set forth in the Preamble.

“Purchase Agreement” has the meaning set forth in Section 2.2.

“Subsidiary” or “Subsidiaries” of any Person means any corporation, partnership or other legal entity of which such specified person (either alone or through or together with any other Subsidiary), owns, directly or indirectly, more than fifty percent (50%) of the stock or other equity interests the holder of which is generally entitled to vote for the election of the board of directors or other governing body of such corporation, partnership or other legal entity.

“TMA” has the meaning set forth in the Recitals.

“TMA Common Stock” has the meaning set forth in Section 2.2.

“Trademark License Agreement” has the meaning set forth in Section 6.3.

Section 1.2

Construction.  For purposes of this Agreement:

(a)

References to “applicable” Law or Laws with respect to a particular Person, thing or matter shall include only such Law or Laws as to which the Governmental Entity that enacted or promulgated such Law or Laws has jurisdiction over such Person, thing or matter as determined under the Laws of the United States.   

(b)

Whenever the context requires, the singular number shall include the plural, and vice versa, the masculine gender shall include the feminine and neuter genders, the feminine gender shall include the masculine and neuter genders, and the neuter gender shall include masculine and feminine genders.

(c)

The words “include” and “including”, and variations thereof, shall not be deemed to be terms of limitation, but rather shall be deemed to be followed by the words “without limitation”.  The words “in the ordinary course of business” shall be deemed to mean in the ordinary course of the operation of the Business, consistent with past practices of the Business.

(d)

Except as otherwise indicated, all references in this Agreement to “Sections” are intended to refer to Sections to this Agreement.

3

(e)

The terms “hereof”, “hereunder”, “herein” and words of similar import shall refer to this Agreement as a whole and not to any particular provision of this Agreement.

(f)

Each Party hereto has participated in the drafting of this Agreement, which each Party acknowledges is the result of extensive negotiations between the Parties, and consequently this Agreement shall be interpreted without reference to any rule or precept of Law to the effect that any ambiguity in a document be construed against the drafter.

ARTICLE II
PARTICIPATION; OPTION

Section 2.1

Participation.  On the terms and subject to the conditions set forth in this Agreement, at the Closing, the Participant shall acquire a 75% participation (the “Participation”) in (a) proceeds of the annual base management fee provided for in Section 7(a) of the Management Agreement, net of reasonable expenses necessary to service TMA under the Management Agreement, and (b) gross proceeds of the Incentive Compensation (as defined in Section 7(b) the Management Agreement).  For the avoidance of doubt, the parties hereto acknowledge and confirm that this Agreement is not an assignment by the Manager within the meaning of Section 14 of the Management Agreement.

Section 2.2

Option.  The Participant shall grant to the Manager one or more options (collectively, the “Option”) to purchase an aggregate of 2.5264% of the fully-diluted authorized and issued shares of common stock, par value $0.01 per share (the “TMA Common Stock”), of TMA (not to exceed 78,113,785 shares of TMA Common Stock) for an exercise price of $0.01 per share.  The Option shall be exercisable upon and from time to time after the occurrence of the Triggering Event (as defined in the Purchase Agreement, dated as of March 31, 2008 (the “Purchase Agreement”), between TMA and the Subscribers party thereto).

Section 2.3

Other Agreements.

(a)

MatlinPatterson shall offer each Subscriber under the Purchase Agreement (other than any Affiliate of MatlinPatterson) an opportunity to participate on the same terms and conditions as MatlinPatterson and its Affiliates in the Participation on a pro rata basis based on the amount of such Subscriber’s total amount of Investment (including the Escrow Amount) (each as defined in the Purchase Agreement) over $1,350,000,000.  If any Subscriber does not so participate then the non-participating Subscriber’s pro rata portion will be offered to all participating Subscribers (including MatlinPatterson and its Affiliates) on a pro rata basis and on the same terms and conditions as stated herein.  Any participating Subscriber shall execute and deliver an agreement to become a Party hereto and be bound hereby as a Participant and shall thereupon become a Participant hereunder and a Party hereto.

(b)

The Manager shall, as promptly as practicable, transfer the Option to the Counterparties under the Override Agreement, dated as of March 17, 2008, among TMA, Thornburg Mortgage Hedging Strategies, Inc. and Greenwich Capital Markets, Inc., The Royal Bank of Scotland Plc, Greenwich Capital Markets, Inc., Bear Stearns Investment Products Inc., Citigroup Global Markets Limited, Credit Suisse Securities (USA) LLC, UBS Securities LLC, and Credit Suisse International (collectively, the “Counterparties”).

4

ARTICLE III
CLOSING

Section 3.1

Closing.  The closing of the transactions contemplated by this Agreement (the “Closing”) shall occur on the date hereof, which shall be referred to as the “Closing Date”.

ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE MANAGER

The Manager and the Principal Stockholders hereby jointly and severally represent and warrant to the Participant with respect to the Manager and each of them hereby separately but not jointly represents and warrants as to itself and, in the case of each Principal Stockholder, any other Principal Stockholder Affiliated with it, as follows:

Section 4.1

Organization.  The Manager is duly organized, validly existing and in good standing under the Laws of the state of Delaware, is duly qualified or licensed to do business as a foreign entity and is in good standing in each jurisdiction in which the conduct of the Business requires such qualification or license, except where the failure to be so qualified or be so licensed would not be reasonably likely to have a Material Adverse Effect.  The Manager has all requisite corporate or other organizational power and authority to carry on the Business as currently conducted.  Each Principal Stockholder that is an entity is duly organized, validly existing and in good standing under the Laws of the state of its organization.

Section 4.2

Authorization of Transaction; Capacity.  The Manager and each Principal Stockholder that is an entity has all requisite power and authority to execute, deliver and perform this Agreement and to consummate the transactions contemplated hereby.  Each Principal Stockholder that is an individual has the capacity to execute, deliver and perform this Agreement and to consummate the transactions contemplated hereby.  GT has full power and authority to bind each of the GT Trusts.  LG has full power and authority to bind the LG Trust.  This Agreement has been duly authorized by the Manager and each Principal Stockholder that is an entity, constitutes a valid and legally binding obligation of the Manager and each Principal Stockholder (assuming that this Agreement constitutes a valid and legally binding obligation of MatlinPatterson), enforceable in accordance with its terms and conditions , except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer and similar Laws of general applicability relating to or affecting creditors’ rights, or by general equity principles, including principles of commercial reasonableness, good faith and fair dealing.

Section 4.3

Noncontravention; Consents.

(a)

The execution and delivery by the Manager and each Principal Stockholder of this Agreement, and the consummation by the Manager and the Principal Stockholders of the transactions contemplated hereby, do not: (i) violate any Law to which the Business, the Management Agreement, TMA, the Manager or any Principal Stockholder is subject; (ii) conflict with or result in a breach of any provision of the certificate of incorporation, bylaws or other organizational documents of the Manager, TMA or any Principal Stockholder that is an entity; (iii) create a breach, default, termination, cancellation or acceleration of any obligation of the

5

Manager, TMA or any Principal Stockholder, or require that any consent be obtained by the Manager, TMA or any Principal Stockholder under, any Contract by which it is bound; or (iv) result in the creation or imposition of any Lien upon the Management Agreement.

(b)

No notices, permits, consents, approvals, authorizations, qualifications or orders of Governmental Entities are required for the consummation by the Manager and the Principal Stockholders of the transactions contemplated hereby, other than such of the foregoing that, if not given or obtained, would not have an adverse effect upon the Manager’s and the Principal Stockholders’ ability to consummate the transactions contemplated by, and discharge their obligations under, this Agreement.  

Section 4.4

Capitalization.  As of the date hereof, the authorized capital stock of the Manager consists of 110,000 shares of Class A common stock, par value $0.05 per share (the “Voting Common Stock”), and 110,000 shares of Class B common stock, par value $0.05 per share (the “Class B Common Stock”).  The issued and outstanding capital stock of the Manager consists of 38,986 shares of Voting Common Stock and 66,408 shares of Class B Common Stock.  All of such issued and outstanding shares of capital stock are duly authorized, validly issued, fully paid and non-assessable, and there are no options, warrants, conversion privileges, subscription or purchase rights or other rights presently outstanding to purchase or otherwise acquire any authorized but unissued, unauthorized or treasury shares of capital stock or other securities of, or any proprietary interest in, the Manager.   ;The Principal Stockholders collectively hold all of the shares of Voting Common Stock.

Section 4.5

Management Agreement.  

(a)

The Management Agreement is a valid, binding and enforceable obligation of the Manager and TMA, except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer and similar Laws of general applicability relating to or affecting creditors’ rights, or by general equity principles, including principles of commercial reasonableness, good faith and fair dealing, and the Management Agreement is in full force and effect.

(b)

Neither the Manager nor TMA is in breach of or default under any term of the Management Agreement or has repudiated any term of the Management Agreement.

(c)

There has been no written notice of termination or cancellation with respect to the Management Agreement.

Section 4.6

Permits.  The Manager has obtained or applied for, and is in compliance with, all permits that are required by any Governmental Entity to conduct the Business as presently conducted, except for such failures to hold or comply with such permits that would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.

Section 4.7

Legal Compliance.  The conduct of the Business by the Manager has complied in all material respects with all applicable Laws, and no Action has been filed or commenced or, to the Manager’s Knowledge, threatened, against the Manager alleging any failure to so comply, except for any of the foregoing that would not be reasonably expected to have, individually or in the aggregate, a Material Adverse Effect.

6

Section 4.8

Litigation.  As of the date of this Agreement, there are no Actions pending or, to the Manager’s Knowledge, threatened, (a) by or against the Manager relating to the Business that would be reasonably expected to have, individually or in the aggregate, a Material Adverse Effect or (b) that question the validity of this Agreement or the Management Agreement, or any action taken or to be taken by the Manager or any Principal Stockholder in connection with this Agreement. To the Manager’s Knowledge, no Governmental Entity or other Person has threatened in writing to commence any such Action.  There are no existing orders, judgments or decrees of any Governmental Entity against the Manager relating to the Business.

Section 4.9

Brokers’ Fees.  None of the Manager and the Principal Stockholders and their respective Affiliates has engaged or has any liability or obligation to pay any fees or commissions to any broker, finder or agent with respect to the transactions contemplated by this Agreement for which the Participant or any of its respective Affiliates could become liable.

ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE PARTICIPANT

The Participant hereby represents and warrants to the Manager and the Principal Stockholders as follows:

Section 5.1

Organization.  The Participant is a limited partnership duly formed, validly existing and in good standing under the Laws of jurisdiction of its organization.  The Participant is duly qualified or licensed to do business as a foreign entity and is in good standing in each jurisdiction where such qualification or license is required, except where the failure to be so qualified or be so licensed would not adversely affect the Participant’s ability to consummate the transactions contemplated by, and discharge its obligations under, this Agreement (a “Participant Material Adverse Effect”).

Section 5.2

Authorization of Transaction.  The Participant has all requisite corporate power and authority to execute, deliver and perform this Agreement and to consummate the transactions contemplated hereby.  This Agreement constitutes a valid and legally binding obligation of the Participant (assuming that this Agreement constitutes a valid and legally binding obligation of the other Parties hereto), enforceable against it in accordance with its terms and conditions, except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer and similar Laws of general applicability relating to or affecting creditors’ rights or by general equity principles, including principles of commercial reasonableness, good faith and fair dealing.

Section 5.3

Noncontravention; Consents.

(a)

The execution and delivery by the Participant of this Agreement, and the consummation by the Participant of the transactions contemplated hereby, do not: (i) violate any Law to which the Participant or its assets is subject; (ii) conflict with or result in a breach of any provision of the certificate of formation or limited liability company agreement of the Participant; or (iii) create a breach, default, termination, cancellation or acceleration of any obligation under any Contract to which the Participant is a party or by which the Participant or any of its assets or properties are bound or subject, except for any of the foregoing in the case of

7

clauses (i) and (iii) that would not have, individually or in the aggregate, a Participant Material Adverse Effect.

(b)

No notices, permits, consents, approvals, authorizations, qualifications or orders of Governmental Entities are required for the consummation by the Participant of the transactions contemplated hereby, except such of the foregoing that, if not given or obtained, would not have, individually or in the aggregate, a Participant Material Adverse Effect.

Section 5.4

Litigation.  As of the date of this Agreement, there are no Actions pending or, to the Participant’s knowledge, threatened, that question the validity of this Agreement, or any action taken or to be taken by the Participant in connection with this Agreement, other than such of the foregoing that would not have, individually or in the aggregate, a Participant Material Adverse Effect.

ARTICLE VI
COVENANTS

Section 6.1

Access to Business.  From and after the date hereof, until the Participation has been terminated, except as may be prohibited by Law, by the terms of any Contract or under any confidentiality agreement, or as may be reasonably required to preserve the confidentiality of privileged or otherwise protected information (in which case the Parties shall take all reasonable measures to permit the compliance with the foregoing obligations in a manner that avoids such harm or consequence), if a Participant and its Affiliates hold 30% or more of the Participations (a “Major Participant”), the Manager shall, upon reasonable notice, permit representatives of such Major Participant to have reasonable access during normal business hours and under reasonable circumstances to personnel, premises, properties, assets, books and records, Contracts and documents to the extent pertaining to the Business .

Section 6.2

Further Assurances.  In the event that at any time after the date hereof any further action is reasonably necessary to carry out the purposes of this Agreement, each of the Parties shall cooperate reasonably with each other and with their respective representatives and take such further action (including the execution and delivery of such further instruments and documents or the furnishing of additional information) as the other Party may reasonably request.

Section 6.3

No Modification of Contracts.  From and after the date hereof, until the Participation has been terminated, the Manager shall not enter into, or amend, modify, supplement or terminate, or waive any provision under, any Contract that is material to the Manager, including for the avoidance of doubt the Management Agreement, any employment agreement or other Contract relating to employees of the Manager and any other Contract relating to TMA, without the prior written consent of any Major Participant; provided that the Manager and GT may amend the Trademark License Agreement, dated as of December 22, 2005 (the “Trademark License Agreement”), to provide that GT shall have the right to terminate the Trademark License Agreement for any reason upon 120 days written notice.

Section 6.4

Director Designation Rights and Other Matters.  From and after the date hereof, until the Participation has been terminated, any Major Participant may request the Board

8

of Directors (the “Board”) of the Manager to take any action or refrain from taking any action with respect to any matter pertaining to the Manager, on the one hand, and either TMA or a current or prospective employee, consultant or advisor of the Manager, on the other hand.  If the Board (or, as the case may be, any Principal Stockholder) shall unreasonably fail to implement a Major Participant’s request in a timely manner, then such Major Participant may elect in writing, from time to time, to designate one or more directors of the Manager (the “Major Participant Designees”) until the number of Major Participant Designees comprise a majority of the members of the Board of the Manager.  After any and all such elections by such Major Participant, the Manager and the Principal Stockholders shall cause the size of the Board to be increased (or existing direc tors other than Major Participant Designees to resign) to the extent necessary, and shall take all other actions necessary, to permit the newly designated Major Participant Designees to take office.  The Manager and the Principal Stockholders shall not otherwise increase or decrease, or consent to or approve an increase or decrease in, the size of the Board without the prior written consent of any Major Participant.

(a)

The Manager agrees to include in the slate of nominees recommended by the Board to the stockholders of the Manager each Major Participant Designee and to use its best efforts to cause the election of each Major Participant Designee to the Board.  Each Principal Stockholder agrees to vote all of its voting securities of the Manager in favor of such Major Participant Designees’ election to the Board.

(b)

If at any time a Major Participant shall notify the Manager in writing of its desire to remove, with or without cause, a Major Participant Designee designated by it, the Manager shall use its best efforts to remove such director from the Board.

(c)

If any Major Participant Designee ceases to serve on the Board (whether by reason of death, resignation, removal or otherwise), the Major Participant which designated such Major Participant Designee shall be entitled to designate a successor director to fill the vacancy created thereby.

(d)

The parties hereto hereby agree that any individual designated as a director of the Manager may be removed for cause with or without the consent of any Major Participant.  No such removal of an individual designated pursuant to this Section 6.4 shall affect a Major Participant’s right to designate a successor director pursuant to Section 6.4(c).

Section 6.5

Repurchase.  If a Participant and its Affiliates cease to beneficially own any equity securities of TMA, then the Manager may elect in writing (delivered to such Participant within 30 days of the Manager's knowledge of such event) to purchase all but not less than all of such Participant's Participation at the fair market value thereof within 90 days of the delivery of the election to purchase.  Fair market value shall be mutually agreed upon by the Board and such Participant in good faith.  

ARTICLE VII
SURVIVAL

Section 7.1

Survival.  The representations and warranties of the Parties contained in this Agreement and in the Ancillary Documents shall survive the Closing. The covenants and

9

agreements of the Parties contained in this Agreement shall survive the Closing until fully performed in accordance with their terms.  

ARTICLE VIII
MISCELLANEOUS

Section 8.1

Notices.  Any notice, request, instruction or other document to be given hereunder shall be sent in writing and delivered personally, sent by reputable, overnight courier service (charges prepaid), sent by registered or certified mail, postage prepaid, or by facsimile, according to the instructions set forth below.  Such notices shall be deemed given: at the time delivered by hand, if personally delivered; one (1) Business Day after being sent, if sent by reputable, overnight courier service; at the time received, if sent by registered or certified mail; and at the time when confirmation of successful transmission is received by the sending facsimile machine, if sent by facsimile.

If to the Manager or any Principal Stockholder:

Thornburg Mortgage Advisory Corporation

150 Washington Avenue, Suite 302

Santa Fe, NM 87501

Attention.: Garrett Thornburg

Facsimile No: (505) 989-8156

If to the Participant, at the address set forth on its signature page.

or to such other address or to the attention of such other Party that the recipient Party has specified by prior written notice to the sending Party in accordance with the preceding.

Section 8.2

Expenses; No Offset.  Except as expressly provided in this Agreement, each of the Participant, the Manager and the Principal Stockholders, and their respective Affiliates, shall bear its or his own costs and expenses (including legal, accounting and investment banking fees and expenses) incurred in connection with this Agreement and the transactions contemplated hereby, whether or not such transactions are consummated.  The Manager may not make any offset against amounts due to the Participant or any of the Participant’s Affiliates pursuant to this Agreement or otherwise.

Section 8.3

Tax Treatment.  The parties intend for this Agreement to be treated as a joint venture classified as a partnership for U.S. federal income tax purposes.

Section 8.4

Assignment; Successors and Assigns.  Neither this Agreement nor any of the rights, interests or obligations provided by this Agreement may be assigned by either Party (whether by operation of Law or otherwise) without the prior written consent of the other Party; provided, however, that the Participant may assign its rights under this Agreement to an entity created by or affiliated with the Participant, provided, further, however, that MatlinPatterson may assign its rights and transfer its liabilities under this Agreement in accordance with Section 2.3(a); provided, further, that, except in the case of the immediately preceding proviso (in which case MatlinPatterson shall have no obligations or liabilities under this Agreement with respect to the proportion of the Participation so assigned), no such assignment shall relieve the assignee of its obligat ions or liabilities under this Agreement.  Subject to the preceding sentence and except

10

as otherwise expressly provided herein, this Agreement shall be binding upon and inure to the benefit of the Parties hereto and their respective successors and permitted assigns.

Section 8.5

Amendment; Waiver.  This Agreement may be amended by a written instrument executed and delivered by the Manager, each Principal Stockholder and the Participant.  The Manager, on behalf of itself and the Principal Stockholders, and the Participant may extend the time for performance of or waive compliance with any of the covenants or agreements of the other, and may waive any breach of the representations or warranties of the other.  No agreement extending or waiving any provision of this Agreement shall be valid or binding unless it is in writing and is executed and delivered by or on behalf of the Party against which it is sought to be enforced.

Section 8.6

Severability.  Whenever possible, each provision of this Agreement shall be interpreted in such manner as to be effective and valid under Law, but if any provision of this Agreement is held to be prohibited by or invalid under Law, such provision shall be ineffective only to the extent of such prohibition or invalidity, without invalidating the remainder of this Agreement.  

Section 8.7

Counterparts.  This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all such counterparts taken together shall constitute one and the same Agreement.

Section 8.8

Descriptive Headings.  The descriptive headings of this Agreement are inserted for convenience only and shall not constitute a part of this Agreement.

Section 8.9

No Third-Party Beneficiaries.  This Agreement shall not confer any rights or remedies upon any Person or entity other than the Parties hereto, their respective successors and permitted assigns.

Section 8.10

Entire Agreement; Conflicting Provisions.  This Agreement collectively constitute the entire agreement among the Parties and supersede any prior and contemporaneous understandings, agreements or representations by or among the Parties, written or oral, that may have related in any way to the subject matter hereof.  

Section 8.11

Governing Law.  THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO ANY LAW OR RULE THAT WOULD CAUSE THE LAWS OF ANY JURISDICTION OTHER THAN THE STATE OF NEW YORK TO BE APPLIED.  EACH OF THE PARTIES HERETO IRREVOCABLY CONSENTS TO THE EXCLUSIVE JURISDICTION AND VENUE OF ANY COURT WITHIN THE CITY OF NEW YORK IN CONNECTION WITH ANY MATTER BASED UPON OR ARISING OUT OF THIS AGREEMENT OR THE MATTERS CONTEMPLATED HEREIN, AGREES THAT PROCESS MAY BE SERVED UPON IT IN ANY MANNER AUTHORIZED BY THE STATE OF NEW YORK FOR SUCH PERSONS AND WAIVES AND COVENANTS NOT TO ASSERT OR PLEAD ANY OBJECTION WHICH IT MIGHT OTHERWISE HAVE TO SUCH JURISDICTION, VENUE AND SUCH PROCESS.

11

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

12

IN WITNESS WHEREOF, the Parties have duly executed and delivered this Agreement on the date first written above.

MP TMAC LLC

By:

Name:

Lawrence M. Teitelbaum

Title:

Authorized Person

[Signature Page – Participation Agreement]

THORNBURG MORTGAGE ADVISORY CORPORATION

By:

Name:  

Title:  

H. Garrett Thornburg, Jr.

Larry A. Goldstone

LLOYD THORNBURG SUBCHAPTER S TRUST

By:

Name:   H. Garrett Thornburg, Jr.

Title:  Trustee

IRREVOCABLE TRUST FOR THE BENEFIT OF THE DESCENDENTS OF H. GARRETT THORNBURG, JR.

By:

Name:   H. Garrett Thornburg, Jr.

Title:  Trustee

2002 THORNBURG CHILDREN’S TRUST

By:

Name:   H. Garrett Thornburg, Jr.

Title:  Trustee

[Signature Page – Participation Agreement]

EX-12

MP TMA LLC

MP TMA (Cayman) LLC

520 Madison Avenue  

New York, New York 10022  

March 31, 2008

Greenwich Capital Markets, Inc.

The Royal Bank of Scotland Plc

Greenwich Capital Markets, Inc.

Bear Stearns Investment Products Inc.

Citigroup Global Markets Limited

Credit Suisse Securities (USA) LLC

UBS Securities LLC

Credit Suisse International

as “Counterparties” to the Override Agreement,
dated March 17, 2008, as amended March 27, 2008, with:

Thornburg Mortgage Inc.

Thornburg Mortgage Hedging Strategies, Inc.

150 Washington Avenue, Suite 302

Santa Fe, New Mexico  87501

Dear Sirs and Madams:

Reference is hereby made to the Purchase Agreement, dated March 31, 2008, among Thornburg Mortgage Inc. (the “Company”), MP TMA LLC and MP TMA (Cayman) LLC (collectively, MatlinPatterson), and the other Subscribers party thereto.  Capitalized or other terms used and not defined herein but defined in the Purchase Agreement shall have the meanings ascribed to them in the Purchase Agreement.

For good and valid consideration, the receipt of which is hereby acknowledged, for the benefit of the Counterparties, MatlinPatterson hereby agrees (a) to exercise its Initial Warrants to purchase shares of Common Stock as promptly as practicable and to the extent permitted by the terms of the Warrant Agreement and applicable federal, state and foreign laws and regulations, (b) to vote all of the shares of Common Stock held by it on the record date for the meeting of the shareholders of the Company to approve an amendment to the Company’s charter increasing the number of authorized shares of Common Stock that the Company may issue to at least 4,000,000,000 shares of Common Stock, and at any adjournment thereof, in favor of such amendment and (c) that it shall not transfer any shares of Common Stock prior to June 30, 2008 unless the transferee agrees in writing to be bound by the terms of this paragraph.

For the avoidance of doubt, by the terms of the Warrant Agreement, MatlinPatterson may not exercise the Initial Warrants granted to it until after April 11, 2008 and may only do so to the

2

extent permitted by applicable federal, state and foreign laws and regulations, including complying with any applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, if applicable.   

(Signature Page Follows)

3

Sincerely yours,

MP TMA LLC

By: MATLINPATTERSON GLOBAL OPPORTUNITIES PARTNERS III L.P., its Member

By: MATLINPATTERSON GLOBAL ADVISERS LLC, as Investment Adviser

By:

_________________________________

Name:  Lawrence M. Teitelbaum

Title:  Chief Financial Officer

MP TMA (CAYMAN) LLC

By: MATLINPATTERSON GLOBAL OPPORTUNITIES PARTNERS (CAYMAN) III L.P., its Member

By: MATLINPATTERSON GLOBAL ADVISERS LLC, as Investment Adviser

By:

_________________________________

Name:  Lawrence M. Teitelbaum

Title:  Chief Financial Officer

[Signature Page – MP Letter to Lenders]