Is it ethical to leave the lending business in 2006 right before the whole industry tanked, and now quietly start a new mortgage company that is taking advantage of people who are losing their homes in foreclosures?
Where are government regulation and the legal system when we need them?
Has anyone heard or seen this new Mortgage Company called Penny Mac? Well interestingly enough it was formed by the ex-Countrywide CEO Stanford L. Kurland. If you think that is interesting, it is even more interesting the company is based in Calabasas, CA. Countrywide's old headquarters was in Calabasas, CA as well. He left Countrywide in 2006, he knew what was about to occur, unlike the rest of the Financial Community.
Now he knows again, the former president and chief operating officer of Countrywide Financial Corp. is running a new mortgage company that acquired distressed mortgages from non other then Countrywide. He is the chief executive officer of Penny Mac. This is the same person who spent three decades with Countrywide in a number of high level executive positions.
How brilliant, he knows, that Bank of America, (who acquired Countrywide) lost about $1.6 billion in the last few months of 2007 and about $4 billion in 2008, needs help. Penny Mac will raise capital from private investors, acquire loans from financial institutions and basically buy distressed loans and properties for Pennies on the Dollar.
So let me illustrate this with an example: if a Property was worth $1million in 2006, then in 2008 it was only worth $800,000 the loan on it was $900,000 (the borrower put down 10%), now Penny Mac will buy it for sake of illustration for $300,000, since the financial institutions seek to reduce their mortgage exposures. Then Penny Mac turns around and sells the property for sake of illustration for $500,000 fast, solid sale, since in 2009 the property is still worth around $750,000. This creates a value for the borrowers and the investors as well. Penny Mac's profits are $200,000 and the new buyer bought a property around $250,000 under value. Everyone is a winner.
No wonder Laurence D Fink, of BlackRock and Jonathon S Jacobson of Highfields Capital are singing praises of Penny Mac, they are the strategic partners in this venture.
My point to this is, the 'smart big boys' are buying. Why? They know it is time to buy. Too bad the first time buyers, the paranoid buyers, the paralyzed buyers, the ones who have been brain washed by the news media's barrage of bad news and by the politician i.e.: the destroyers of consumer confidence, they are not buying. Hence they will be left behind again. Instead of worrying and asking is this the bottom of the Real Estate Market? They should be reading what is going on in the background. Penny Mac was formed in March of 2008. They set up and have been working in the background now for about nine months.
So my message to the fence sitting buyers is, it is time to get off the fence and if you want to sit around the fire place in a few years to tell stories that you bought were lucky to buy at the bottom of the market like your parents in the 80's and your great grand parents in the 30's, it was because your Realtor showed you the Proof and you were wise enough to listen to him or her.
If you are a consumer who is considering buying or selling a home,investment real estate, vacation homes, or beach properties in Southern California, Los Angeles, Century City, Westwood,Beverly Hills,Culver City,Marina Del Rey, Venice or Malibu. Feel Free to give me a call at 310.486.1002 (USA) or email me at EndreBarath@TheMLS.Com or visit one of my websites at http://www.endrebarath.com