PennyMac Investors Make $558 Million Deal with the FDIC

When business failed at the First National Bank of Nevada due to unsafe and unsound practices, a group of investors saw it as an opportunity to make a deal involving the remaining assets. The private investors, known as PennyMac (Private National Mortgage Acceptance Co.), which includes former executives of Countrywide Financial Corp., announced on Wednesday that they purchased $558 million in home mortgages from the FDIC.

PennyMac's chairman and CEO Stanford Kurland stated in a recent press release, "We are excited about investing in and managing mortgages in this unique transaction where we share in the economics with the FDIC." Under the new agreement, PennyMac will receive 20% of all cash flow from the mortgages, with 80% initially going to the FDIC until revenue from mortgages reach an agreed threshold, then the split will shift to 60/40 through plan to rework mortgages in an "arrangement that is beneficial for both parties", according to David Barr, spokesman for the FDIC.