PennyMac Funds Buy Mortgage Portfolio From FDIC

Private National Mortgage Acceptance Company, LLC — that’s PennyMac to you and I — said Wednesday morning that investment funds managed by its affiliate, PNMAC Capital Management, LLC, had recently completed the purchase of $558 million in residential mortgage loans from the Federal Deposit Insurance Corporation. The loans were formerly held by the First National Bank of Nevada, closed by the Office of the Comptroller of the Currency in July; the FDIC was named receiver. The transaction is the first structured sale of a non-construction residential mortgage loan portfolio by the FDIC to date, PennyMac said in a press statement. Details of the transaction, including any loss-sharing arrangement, were not disclosed. “We are excited about investing in and managing mortgages in this unique transaction where we share in the economics with the FDIC,” said Stanford Kurland, PennyMac’s chairman and CEO, and a former executive at Countrywide Financial. Mortgage servicing of the loan portfolio will be performed by PennyMac Loan Services, LLC, a wholly-owned subsidiary of PennyMac; the company said it will apply the FDIC’s loan modification programs, as part of the terms of acquisition. PennyMac was formed in March 2008 by BlackRock, Inc. (BLK), Highfields Capital, and a management team of mortgage industry veterans led by Kurland to address the ongoing dislocations in the U.S. mortgage market. The company has a $2 billion war chest to use towards buying distressed residential mortgage assets. More than a few huge hedge funds and distressed asset specialists are lining up captive servicing operations, of course, with the distinct goal of buying distressed mortgages and then actually keeping the borrower in their home. Beyond PennyMac, another such example is San Diego-based National Asset Direct, which owns its own servicing shop called iServe Servicing; Marathon Asset Management, LLC, which boasts more than $20 billion in assets, is also buying up distressed mortgages and is also pumping the mortgages it buys to its own captive servicing operation, Phoenix-based Marix Servicing, LLC. Most fund-captive servicers are also aggressively competing for business from third-party investors, as well; a number of new breed servicers have stepped in to compete for this business as well, including Dallas-based Acqura Loan Services. Investor sources tell HW they expect a brisk transaction volume among investors in residential mortgages during 2009; look for full coverage of investor trends in an upcoming HousingWire Magazine feature. Don’t subscribe? Click here to start getting the only independent monthly covering the entire mortgage market. Write to Paul Jackson at Disclosure: The author held no relevant investment positions when this story was published. Indirect holdings may exist via mutual fund investments. HW reporters and writers follow a strict disclosure policy, the first in the mortgage trade.

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