It had to happen - with Freddie Mac and Fannie Mae all the news today, we now see a company, Private National Mortgage Acceptance Company, LLC, that is addressing the dislocations in the U.S. mortgage market.  Nicknamed PennyMac, they are investing in and servicing residential mortgage assets on behalf of private investors.  Headed by Stanford Kurland, former president of Countrywide Financial Corp., their focus is to work with homeowners that are in trouble with their mortgage, and are going to attempt to work with these home owners to try to get them back up to speed and paying.  A chief complaint is that foreclosed homes are subject to vandalism and the downturn of neighborhoods.  One has to also think that the thoughts of a bank left holding the bag with absolutely nothing coming in off the mortgage might perhaps have a little to do with it, too.

I gathered this information after reading about a gentleman named Angel Gutierrez and his wife Brenda, who buy up these foreclosures at pennies on the dollar and attempts to turn them around.  Gutierrez checks out the properties, and determines if there is value in helping the people get on their feet, or whether they are probably not liable to pay up.  If they can’t, he gives them money for a few months rent, and the price of a mover to get them out of the house.  They refer to Mr. Gutierrez and company as “bottom feeders.”  My, how eloquent!

In San Diego County, Gutierrez’s base of operations, he buys properties at 20 cents on the dollar.  He helps the person move, and then resells the house for well below even the neighborhood’s declining market value.  This still leaves him with a goodly profit.  He recently bought a $365,000 home for $73,000.  He sold it for $150,000, a nice profit and a buy for the new owner.

Now, companies like New York- based BlackRock, Goldman Sachs Group Inc. and Morgan Stanley are getting into the business by bidding on thousands of mortgages at a time, making it tough for the bottom feeders to compete.  PennyMac was developed for just such an enterprise.  They are acquiring loans from financial institutions seeking to reduce their mortgage exposures.  In other words, get out from under a non-paying liability.  I hope things work out for everyone concerned.  At least all of the money is not being left on the table.