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Scott Jagow: You’d think the people who once ran Countrywide would wanna stay far away from the mortgage market. But that’s not the case. Today, some former Countrywide executives will launch a new company that hopes to profit from the whole subprime mess. Amy Scott has more.
Amy Scott: The new Private National Mortgage Acceptance Company will go by the nickname PennyMac. The aim is to buy distressed loans, restructure those loans so that borrowers can stay in their homes, and then sell the loans at a profit.
It’s a joint-venture between investment firms BlackRock and Highfields Capital Management. Former Countrywide president, Stanford Kurland, will lead the management team of mortgage pros, many of whom also come from Countrywide.
Mortgage economist Tom La Malfa doesn’t think the connection will hurt the new firm:
Tom La Malfa: A lot of the people that worked at that company were very bright, are very bright, and very entrepreneurial. And I think that the market will overlook the excesses of Countrywide when examining the individuals who are part of this.
PennyMac is just one of a handful of companies trying to cash in on the subprime collapse by buying mortgages at bargain-basement prices.
It’s risky, but La Malfa says PennyMac might pay just dimes on the dollar for loans that could yield returns of 15 percent or higher.
In New York, I’m Amy Scott for Marketplace.