Today, the group will announce the launch of Private National Mortgage Acceptance Company LLC, or PennyMac, an investment firm formed as a joint venture between asset manager BlackRock Inc., under Chief Executive Laurence Fink, and Boston investment firm Highfields Capital Management.
PennyMac seeks to raise more than $2 billion to buy distressed mortgages on the cheap, work with borrowers to restructure them, and then resell them as performing mortgages at a profit.
PennyMac is planning to buy whole mortgage loans -- the old-fashioned mortgages that banks routinely owned before the mortgage-securitization business came along. Executives at the new firm believe that troubles with whole loans are a big shoe to drop for the mortgage market, with a massive unwinding steadily under way. They assume that a lot of these mortgages will be sold at big discounts as banks and thrifts clean up their balance sheets.
PennyMac will operate from Calabasas, Calif., the hometown of Countrywide, the largest mortgage lender in the country. While the two firms aren't related, PennyMac will be closely watched because it employs so many former Countrywide executives. Countrywide alumnus David Spector, who until most recently was co-head of the now-downsized global residential mortgages group at Morgan Stanley, will be chief investment officer.
Others leading the firm are James Furash, a former chief executive of the Countrywide Bank unit, and Michael Muir, a former chief financial officer of the unit.
PennyMac's plan to profit from the mortgage industry's turmoil is likely to draw fire, especially from those who believe Countrywide's aggressive sales tactics and lowered lending standards helped lead to the subprime-mortgage troubles in the first place.
"The whole sub-prime mortgage fiasco was built on sort of Wall Street's snake-oil salesmen convincing America this is a can't-miss scheme," says Irv Ackelsberg, a consumer lawyer in Philadelphia who testified to the Senate Banking Committee on lending last spring. "It sounds like they've just morphed into some new version."
PennyMac executives disagree, saying many of them were involved in risk management while at Countrywide and its units and have little to do with the firm's recent problems.
"I don't think it's ironic; I think it's appropriate that experienced people are coming in" that have "the greatest capability and knowledge to revitalize the mortgage market." says Mr. Kurland. A Countrywide spokesman declined to comment.