[8] In response, during the week beginning August 13 the company stopped accepting loan applications,[9] sold US$20.5 billion of its mortgage backed securities portfolio (in doing so incurring a capital loss of US$930 million), mitigated the potential for margin calls by reducing its repurchase borrowings and delayed payment of a previously announced stock dividend from August 15 to September 17.

[11] A couple of weeks later the company also raised US$500 million through a preferred share offering,[12] a move described as "a desperate attempt to stay afloat",[13] and began accepting applications again.

On March 7, the company announced that it would be restating its 2007 financial results, and also that as of the previous day, it had US$610 million in outstanding margin calls, a much greater amount than cash available.

[15] Thornburg Mortgage indicated on March 19 that it had reached an agreement with five of its creditors which stopped additional margin calls for one year but included several conditions, the most urgent of which was to raise US$948 million within seven business days.

[16] The five creditors were identified as Bear Stearns, Citigroup, Credit Suisse, Royal Bank of Scotland and UBS[17][18] The company further confirmed that without the additional capital it may have to file for bankruptcy protection.

The company marketed its products via print advertising, direct mail and online, avoiding the significant expenses associated with maintaining a network of branches.