Former executives from Countrywide Financial, the United States sub-prime mortgage lender, have set up a new venture aiming to profit from the bursting of the housing bubble that their old firm is blamed for helping to create.
A team led by former Countrywide president Stanford Kurland unveiled PrivateNational Mortgage Acceptance - PennyMac for short - which will buy up loans whose borrowers have got into financial difficulties.
With mortgage arrears at record levels across the US after millions took on loans they could not afford, many of the banks that lent to them are facing financial strain.
While many home loans were packaged into mortgage-backed securities and other derivatives whose collapse in value has caused chaos in global financial markets, many still reside on the books at the issuing banks.
PennyMac hopes to benefit from expected fire sales by distressed banks.
Kurland said it would work with borrowers to refinance the loans, helping to avoid foreclosure and making the loan more valuable so that it could sell it on at a profit. The company would "work to help lenders and borrowers, as one step in addressing the US mortgage crisis".
The US$2 billion ($2.5 billion) venture is being part-funded by BlackRock, the giant fund manager which is itself half-owned by Merrill Lynch, one of the Wall St institutions worst hit by the credit crisis.
Most senior executives at PennyMac are Countrywide veterans. Kurland spent 27 years with the business before leaving in 2006. He will be chief executive, with James Furash, founder of Countrywide's banking subsidiary, as chief development officer.
