According to a press release today, Private National Mortgage Acceptance Company, LLC, (PNMAC) or Pennymac for short, has completed the purchase of $558 million worth of residential mortgage loans from the Federal Deposit Insurance Company (FDIC). This first batch is related to the failed First National Bank of Nevada, which came under the FDIC umbrella in late July 2008 when the Reno, Nevada, bank was closed. PennyMac was formed in early 2008 as a market response to the mortgage crisis, having been formed specifically to step into the role of buying up loans from the FDIC. PennyMac has the backing of BlackRock and Highlands Capital Management, according to Business Week, which gives PennyMac some deep pockets to allow the flexibility needed to work out loans with distressed consumers.
PennyMac: Mortgage relief for some distressed consumers on the horizon at last
According to PennyMac’s website, PennyMac is dedicated to working out solutions with mortgage holders so that they can remain in their homes. Their mission statement detailed as: “Our mission is to keep borrowers in their homes with actionable and realistic solutions….In service of this mission, we aim to develop loan programs that avoid foreclosure by directly addressing each borrower’s willingness and ability to pay their mortgages.”
Since countless Americans fell prey to sub-prime mortgages and ARMs that adjusted up while their income fell short, this mission statement will give a glimmer of hope to those who can no longer afford their home, yet don’t want to let it go. The announcement of the completed sale of mortgage loans to PennyMac is a positive sign that the mortgage crisis facing so many Americans may well be moving toward the promised relief to those struggling to make their mortgage payments each month.
News of PennyMac’s purchase to allay fears of socialism
Last fall brought many instances of government bailout of various financial institutions, including Freddie Mac and Fannie Mae. There was public outcry to get the government out of the mortgage market and not have Americans writing out their monthly mortgage payment to Uncle Sam. The sale of residential mortgages to a privately held company such as PennyMac should help to stem the fears of those who believe our country is running toward socialism at a break neck pace. It is the first tangible sign that Uncle Sam does not want to be our Big Brother after all.