Would you buy a used loan from these guys?

Rachel Beck, the national business columnist for The Associated Press, writes about PennyMac, a business previously mentioned on this blog, and its proposed public offering.

"Countrywide Financial placed itself at the epicenter of the housing crisis by making far too many risky loans to homeowners who ultimately couldn't afford them. Those missteps cost CEO Angelo Mozilo his job when the lender was taken over by Bank of America a year ago at a fire sale price."

"Mozilo is now spending most of his time dealing with the dozens of lawsuits naming him as a defendant, but his one-time No. 2 executive and a team of Countrywide alumni are still in the game — shopping around a new business called PennyMac that buys up distressed mortgages and modifies borrowers' loans."

"So, the same people who helped create the housing mess are now trying to make money cleaning it up. As off-putting as that sounds, there's a certain logic to it."

Beck details the history of PennyMac's founder and just how the business is structured to maximize profits. Will investors bite? "PennyMac's leadership could help fix the economy, or stuff they own pockets. Let's hope capitalism doesn't rule."

Of course, the full story is yet to be written. But you can read Rachel Beck's coverage here.

(We are proud to add that Rachel Beck is the daughter of one our firm's clients.)

Vested Title Inc.
648 Newark Avenue, P.O. Box 6453, Jersey City, NJ 07306
Tel 201-656-9220 - Fax 201-656-4506
E-mail vti@vested.com - www.vested.com

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Where There's a Buck to be Made, Someone Will Find the Way to Make It

The New York Times is reporting tonight, March 3, 2009, "Ex-Leaders at Countrywide Start Firm to Buy Bad Loans."

Fairly or not, Countrywide Financial and its top executives would be on most lists of those who share blame for the nation’s economic crisis. After all, the banking behemoth made risky loans to tens of thousands of Americans, helping set off a chain of events that has the economy staggering.

So it may come as a surprise that a dozen former top Countrywide executives now stand to make millions from the home mortgage mess.

Stanford L. Kurland, Countrywide’s former president has formed a company called PennyMac to buy loans, some for pennies on the dollar, from the U.S. government and then proceed to collect on them. Bad idea?

It is quite evident that their efforts are, in fact, helping many distressed homeowners.

“Literally, their assistance saved my family’s home,” said Robert Robinson, of Felton, Pa., whose interest rate was cut by more than half, making his mortgage affordable again.

Others are not so happy.

But to some, it is disturbing to see former Countrywide executives in the industry again. “It is sort of like the arsonist who sets fire to the house and then buys up the charred remains and resells it,” said Margot Saunders, a lawyer with the National Consumer Law Center, which for years has sought to place limits on what it calls abusive lending practices by Countrywide and other companies.

Countrywide is the subject of lawsuits in several jurisdictions and Kurland's role in the busting of the lender is under scrutiny.

It's certainly not a crime to make money off of economic misfortune, but when you've been part of the problem....?

What do you think?

Vested Title Inc.
648 Newark Avenue, P.O. Box 6453, Jersey City, NJ 07306
Tel 201-656-9220 - Fax 201-656-4506
E-mail vti@vested.com - www.vested.com

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