Discover your dream Career
For Recruiters

Big Names Behind New Distressed-Mortgage Firm

Several high-level alumni of Countrywide Financial joined the caravan of start-ups looking to profit by picking through the mortgage market's rubble.

At least 10 former Countrywide employees, led by ex-president Stanford Kurland, have formed Private National Mortgage Acceptance Company LLC, or PennyMac. The venture will acquire and restructure distressed residential mortgage loans, according to its main backers, money managers BlackRock Inc. and Highfields Capital Management.

"PennyMac will raise capital from private investors, acquire loans from financial institutions seeking to reduce their mortgage exposures, and seek to create value for both borrowers and investors through distinctive loan servicing," the companies said.

At Countrywide, Kurland had been expected to succeed Angelo Mozilo as chief executive. Instead, he left in October 2006 because "Kurland wanted the CEO post on terms the board couldn't accept," Mozilo told Bloomberg News at the time.

Last week, Bloomberg named other Countrywide alumni following Kurland to PennyMac. (Like Countrywide, the company is headquartered in Calabasas, Calif.) They include:

- David Spector, chief investment officer, who is also a former co-head of global residential mortgages at Morgan Stanley.

- Farzad Abolfathi, chief technology officer of the new firm.

- James S. Furash, chief development officer.

- Michael L. Muir, chief capital markets officer

- Mark P. Suter, chief portfolio strategy officer.

- David M. Walker, chief credit officer.

- Lior Ofir, director of technology.

- Aratha M. Johnson, chief administrative officer.

- Adal Bisharat, director of strategic planning, who also headed sales and production for IndyMac Bank's home equity division.

Non-Performing Mortgages Expected to Mushroom

More than 70 distressed-investing funds have sprung up to pursue opportunities from bargain-priced mortgage assets, Bloomberg says. Marquee names in the space include Blackstone Group, Pacific Investment Management Co. (Pimco) and Goldman Sachs. WL Ross & Co., controlled by billionaire investor Wilbur Ross, is actively buying mortgage servicing companies, another area PennyMac plans to target.

Housing market turmoil has washed away traditional sources of demand for so-called private-label mortgage securities, created by banks from loans whose repayment isn't guaranteed by Fannie Mae or Freddie Mac. Still, despite widely publicized write-downs of mortgage assets by banks and investment firms, "whole loan losses have barely begun to materialize," said Jonathon S. Jacobson, co-founder and senior managing director of Highfields Capital Management, in announcing PennyMac's launch. "Over the next two to three years, we anticipate that the volume of bank-held non-performing mortgages will grow dramatically."

Kurland said the company's strategy is to avoid foreclosures, and instead restructure the loans of struggling borrowers.

AUTHOReFinancialCareers News Insider Comment
  • An
    14 July 2008

    Yup its interesting that these guys are the ones spearheading the new investment co's. But this is a way to keep people in the their homes, a way to stabilize the housing market and in turn the economy. In the end the shareholders are the losers, whether they deserve to be or not.

  • Ar
    Art Bridgeman
    28 March 2008

    I find it interesting that the top management at Countrywide is able to start such a risky endeavor. These people were running Countrywide when they exposed the shareholders to excessively high risk loans. They violated fiduciary responsibility to the stakeholders by expanding market share through stated income stated asset mortgages that, to some extent, were fraudulent in nature. They had to know that this violated the basics of risk management and were more focused on lining their pockets with huge bonuses and stock options. I caution any individual investor from placing their money with these gentleman. They want to buy the distressed debt at a huge discount which they caused in the first place by offering mortgages to people that could not afford the debt or out right lied about their financial balance sheet. I am astonished that these gentleman are not facing criminal investigations and possible jail time, but instead we are allowing them to profit off of the mess they helped cause. Then they try to spin their business in such a way that they are helping people stay in their homes. How ironic.

Sign up to our Newsletter

The essential daily roundup of news and analysis read by everyone from senior bankers and traders to new recruits.

Boost your career

Find thousands of job opportunities by signing up to eFinancialCareers today.
Latest Jobs

Sign up to our Newsletter

The essential daily roundup of news and analysis read by everyone from senior bankers and traders to new recruits.