Ex-Countrywide chiefs back in business – buying distressed loans
Tuesday 25 March 2008
Former executives from Countrywide Financial, the US sub-prime mortgage lender, have set up a new venture aiming to profit from the bursting of the housing bubble that their old firm is blamed for helping to create.
A team led by former Countrywide president Stanford Kurland unveiled Private National Mortgage Acceptance Co – PennyMac for short – which will buy up loans whose borrowers have got into financial difficulties.
With mortgage arrears at record levels across the US after millions took on loans that they could not afford, many of the banks that lent to them are facing financial strain. While many home loans were packaged into mortgage-backed securities and other derivatives whose collapse in value has caused chaos in global financial markets, many still reside on the books at the issuing banks. Ben Bernanke, chairman of the Federal Reserve, warned last month that some regional banks are likely to go bust.
PennyMac hopes to benefit from expected fire sales by distressed banks. Mr Kurland said it will work with borrowers to refinance the loans, helping to avoid foreclosure and making the loan more valuable so that it can sell it on at a profit. The company will "work to help both lenders and borrowers, as one step in addressing the US mortgage crisis," he said.
The $2bn venture is being part-funded by BlackRock, the giant fund manager which is itself half-owned by Merrill Lynch, one of the Wall Street institutions worst hit by the credit crisis.
Most senior executives at PennyMac are Countrywide veterans. Mr Kurland spent 27 years with the business before leaving in 2006. He will be chairman and chief executive, with James Furash, founder of Countrywide's banking subsidiary, as chief development officer. David Spector, chief investment officer, is a former head of secondary markets at Countrywide and is a former head of global mortgage trading at Morgan Stanley in London.
- 1 Caitlyn Jenner car crash: Driver who died in collision sued by surviving passengers for $18.5m
- 3 Watch the Supermoon live: How to see the brightest Moon of the year tonight
- 4 Hulk Hogan wants to be Donald Trump's running mate in the US Presidential election
Caitlyn Jenner car crash: Driver who died in collision sued by surviving passengers for $18.5m
Celebrity Big Brother 2015: Tila Tequila kicked off show after 'describing Hitler as a good man'
Watch the Supermoon live: How to see the brightest Moon of the year tonight
Hulk Hogan wants to be Donald Trump's running mate in the US Presidential election
Blood Moon and Supermoon: September to bring brightest – and dimmest – full Moon of the year on same night
Climate change: 2015 will be the hottest year on record 'by a mile', experts say
'Women only' train carriages: Jeremy Corbyn unveils radical move to tackle public harassment
Black holes are a passage to another universe, says Stephen Hawking
Iain Duncan Smith 'should resign over disability benefit death figures', says Jeremy Corbyn
Stock up on canned food for stock market crash, warns former Gordon Brown adviser
Labour leadership: Jeremy Corbyn voters most likely to believe 'world is controlled by a secretive elite'
iJobs Money & Business
£25000 - £30000 per annum: Recruitment Genius: From modest beginnings the comp...
£35000 - £40000 per annum: Recruitment Genius: From modest beginnings the comp...
£15000 - £65000 per annum: Recruitment Genius: This is an exciting opportunity...
£18000 - £20000 per annum: Recruitment Genius: This is a fantastic opportunity...