- The Washington Times - Friday, March 13, 2009


Remember Countrywide Financial, the former home mortgage giant that is widely blamed as a cause of the housing bubble collapse that triggered the deep slump in the overall economy? The firm faltered, was bought by Bank of America at a bargain price, and has such a bad reputation that the name will be expunged. But, it turns out, the former president of Countrywide and a dozen former top executives have started a firm that is buying up at a steep discount the delinquent home mortgage loans that the U.S. government took over from failed banks; the firm, PennyMac (whose full name is Private National Mortgage Acceptance Co.) then offers to slash interest rates or modify loans in other ways to entice borrowers to resume payments. If that doesn’t work, they can always start foreclosure proceedings. PennyMac is doing “off-the-charts good,” says Countrywide’s former president, since it paid so little to obtain the loans that it makes a nice profit, even with giving homeowners drastic interest rate cuts or other attractive deals.

What is wrong with this picture? For homeowners who are given greatly reduced mortgage rates and thus can afford payments, the answer may be: Nothing. And federal banking officials say it is important to do business with experienced mortgage operators, one shouldn’t blame any individual for questionable lending practices just because he worked at a firm like Countryside, and it’s good to do business with experienced mortgage operators. Still, for those gravely wounded by the excesses at Countrywide, “It’s sort of like the arsonist who sets fire to the house and then buys up the charred remains and resells it,” a lawyer with the National Consumer Law Center told the New York Times.

Perhaps this is the American entrepreneurial spirit at its best.

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