In the World of Mac, Does Freddie and Fannie Still Rule? - January 7, 2008

The Mac attack… no not Freddie (FRE) or Fannie (FNM), but Penny. In a statement released earlier today, the Private National Mortgage Acceptance Company, LLC (PennyMac) announced that they were purchasing nearly $560M worth of residential mortgages from the Federal Deposit Insurance Corp. (FDIC).

The mortgages, first held by the First National Bank of Nevada, were seized by the FDIC last year, as the bank could not fund the mortgages they were holding. On July 25, 2008, First National Bank of Nevada was closed by the Office of the Comptroller of the Currency and the FDIC was named receiver.

The purchase by PennyMac signifies the first such transaction by the FDIC in a structured sale of non-construction residential mortgage loans to a private entity.

Formed in early 2008, PennyMac was the brainchild of BlackRock Inc. (BLK), HighFields Capital, and a consortium of mortgage industry leaders in order to concentrate on the dissonance within the U.S. mortgage industry. The company currently has more than $2B in capital that they are willing to invest into a struggling mortgage sector.

The key member leading the team is Stanford L. Kurland, CEO and Chairman of PennyMac. With his leadership, along with others, PennyMac is focused on acquiring and expediting residential mortgage assets on behalf of the company’s private investors.

PennyMac’s primary operation is the recognition of key investment opportunities that include modeling, valuation, along with capital market activity research. Also included is transaction management, strategic portfolio management, due diligence and the company’s innovative loan restructuring programs.

"We are excited about investing in and managing mortgages in this unique transaction where we share in the economics with the FDIC," said Kurland. "We believe that PennyMac's approach of strategically managing troubled loans combined with our best-in-class mortgage servicing will create significant value for homeowners as well as our investors."

Mr. Kurland went on to add, "PennyMac's objective is to maximize value by working with borrowers to maintain ownership of their homes and reduce foreclosures."

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