More good news for the mortgage industry.
Did you see this headline this morning: “Former Countrywide Exec Heads Firm Targeting Troubled Mortgages”? If you didn’t see it, or perhaps overlooked it, please revisit the article here. What you will read is the announcement of a new company called PennyMac created by a partnership between one of the pioneers behind Countrywide, and well as Blackrock, Inc. the ginormous investment firm.
So what is PennyMac going to be doing? PennyMac was created in an effort to capitalize on the downturn in housing. Failing loans, and defaulted borrowers have little hope in this current market. Most lenders which extended these borrowers loans, no longer offer programs to help them and foreclose on these home-owner’s as a result. PennyMac isn’t doing god’s work. They are going to raise private capital and help home-owner’s who cannot afford their payments by restructuring their loans. Whereas most lenders don’t have the time or energy to deal with defaulting home owners, clearly PennyMac sees a business opportunity in the morass. There will surely be an economic benefit for the company, but that is to be expected when the company will be assuming some difficult loans from the outset.
Why is this important to you as an Originator? It shows you that industry veterans are trying to think of new ways to help homeowners, which in turn will stabilize this market. The best part of our economic system is that while some banks sit languidly and wait for the market to correct itself, others see an opportunity to make money which helps get the market moving forward. Anything that is the opposite of sitting on the sidelines is a huge improvement. It is only a matter of time before lenders themselves add specific Agency loans that incorporate their own appetite for sub-prime and Alt-A borrowers. It is too large of a market to overlook and to hope that it goes away.
Tags: PennyMac
