An ex-Countrywide honcho is buying mortgages for pennies on the dollar, then offering distressed homeowners greatly reduced monthly payments.
Kurland’s new company, PennyMac (!), goes to a demolished bank or the FDIC and buys up delinquent mortgages at, say, 20 cents on the dollar. Kurland’s people then call the delinquent homeowner and say, “How would you like to pay $2,000 a month instead of $4,000?” Once the homeowners realize it’s not a scam, they say “hell, yes.” PennyMac then books the often-massive spread between what it paid for the loan (20 cents) and what it is getting from the loan (50 cents).
The homeowner keeps their house, PennyMac makes money. Seems like everyone wins here.
Capitalism is a wily, inventive beast, isn’t it? Knock it down and it pops right back, morphs into something else, and keeps going.
And yes, he’s probably sometimes buying back junk loans he once made.
