I thought the era of -mac suffixes was over, until reading this MarketWatch tidbit:
Private National Mortgage Acceptance Co. (PennyMac), a company formed to buy troubled mortgages, said Wednesday that funds managed by its affiliates bought $558 million of home loans from the FDIC. The loans were formerly assets of First National Bank of Nevada, which the FDIC closed earlier this year when it became the firm’s receiver. PennyMac said it bought the loans on behalf of private investors and plans to work out the loans with borrowers. “PennyMac’s objective is to maximize value by working with borrowers to maintain ownership of their homes and reduce foreclosures,” the firm said in a press release. PennyMac was formed in early 2008 by BlackRock, Inc., Highfields Capital, and a team of mortgage industry veterans.
Liquidating a failed bank’s estate in an attempt to recoup insurance funds is within the FDIC’s charter. Apparently, the FDIC isn’t picky about who buys those assets. I listened to this March 2008 NPR broadcast about Pennymac, and found out the following:
-It was founded by former Countrywide executives to “buy troubled mortgages on the cheap.”
-Though Pennymac execs say they have no such intention, critics point out that the organization could just “sit on mortgages until property value increases, then foreclose homeowners out of their homes.”
-As of March 2008, it planned on buying 15-20,000 troubled mortgages.
My confidence levels in Countrywide executives are low enough that I wouldn’t put it past them to employ the sit-and-foreclose method. There must be a better way.