Some of the lenders blamed for fueling the nation’s mortgage woes are now profiting from the crisis.
They include a group of former executives of Countrywide Financial Corporation, a company assigned wide blame for issuing the high-risk mortgages partially responsible for the current recession.
Stanford L. Kurland, Countrywide’s president until late in 2006, started PennyMac last year, filling the company’s leadership ranks with his former Countrywide colleagues.
PennyMac - officially the Private National Mortgage Acceptance Corporation LLC - is prospering by purchasing from the government delinquent mortgages once held by failed banks, The New York Times reports.
Having paid fire-sale prices for the mortgages, PennyMac reissues them at substantially lower rates.
In a sense, it’s a win-win situation. Homeowners can keep their homes because their interest rates have been lowered, and PennyMac makes money in the bargain.
However, critics contend that Kurland and the other former Countrywide executives should not be the ones to win.
“It is sort of like the arsonist who sets fire to the house and then buys up the charred remains and resells it,” a lawyer for National Consumer Law Center told the Times.
In his defense, Kurland says that while he pushed Countrywide to make “higher risk” loans while he was president, he left before the company began its riskiest lending practices.
Nonetheless, he is named in lawsuits against Countrywide that contend that the shoddy lending began before his departure.
An accountant, Kurland, 57, joined Countrywide in 1979 and rose to become second-in-command after Angelo R. Mozilo. He told the Times he left the company because of “internal conflicts” with Mozilo.
David Sambol replaced Kurland as president of Countrywide, which was purchased in July of last year by Bank of America. Sambol did not go to Bank of America as had been expected when the deal was first announced.
Kurland received financing for PennyMac from BlackRock, Inc., and Highfields Capital Management.
In January of this year, PennyMac paid $43.2 million for $558 million in residential mortgage loans once held by the First National Bank of Nevada.
Under the terms of the deal, the government receives 80 percent of the cash generated by the loans and PennyMac gets 20 percent until a threshold is reached. After that, the government gets 60 percent and PennyMac 40 percent.
Federal officials did not comment specifically to the Times about the return of Kurland and other Countrywide officials to the mortgage industry.
Speaking in general, they did say it was important to do business with experienced mortgage operators.
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2 Comments
#1. pamela price 03.07.2009
This is disgusting and unacceptable. Isn’t there ANY accounting for our
hard earned TAX dollars???
Who is responsible for this outrageous deal with
CountryWide? My Social Security payment is $537 a month
and it barely covers Medicare and all the ridiculous other health insurance called Supplemental while these
criminals are robbing the elderly and poor at will.
Doesnt’ anybody CARE?
This is the type of corrpution that caused the Russian Revolution…
#2. bali 03.08.2009
Those who were unjustly and fraudulently got enriched should pay restitution to those they made destitute, directly or indeirectly. If homeowners can become homeless, and unemployed due to the economic meltdown caused by ponzi schemers—those schemers should compensate the one’s they harmed, as equity demands.
If our soldiers can be sent off to undefined, uncertain missions, and are asked to serve again as part of stop-loss, giving up life, future, family etc., these luxury loving white collar criminals should be expected to do equal (”sacrifice” for them) service to their country, based on their actions and as neccessitated by the economically desperate conditions.
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