PennyMac mints new HQ in Moorpark
A new venture led by a former top executive of Countrywide Financial Corp. is moving its headquarters and about 300 jobs to Moorpark.
Private National Mortgage Acceptance Co., or PennyMac, has signed up for 142,000 square feet of space in Moorpark — the largest office lease in Ventura County this year, according to the brokerage firm behind the deal.
PennyMac was started at the height of the financial crisis to buy up toxic mortgages from banks for pennies on the dollar. The startup has painted itself as a company working to stabilize the mortgage market by presenting delinquent borrowers with alternatives to foreclosure.
But the firm is profiting — to the tune of $24.5 million in 2010 — from the same real estate meltdown that Countrywide helped create.
PennyMac founder and CEO Stanford Kurland is the former No. 2 to Countrywide CEO Angelo Mozilo. Although Kurland has never faced regulatory action for his role at the mortgage giant, he served more than two decades with Countrywide, most recently as its president until his departure in late 2006.
During that time, Countrywide made risky loans to tens of thousands of Americans, helping set of a chain of events that eventually led to the near-collapse of the U.S. financial system. Countrywide itself was sold to Bank of America in a near fire-sale in 2008.
PennyMac spokesman Kevin Chamberlain said Kurland — who cashed in on about $200 million of Countrywide shares before his departure — left the home loan giant in 2006 because of disagreements with other officers about its risky lending practices. “He was really kind of pushed out,” Chamberlain said. “He did leave the company. He did leave because of disagreements over risk management.”
Kurland’s new venture now makes its mark by picking up pieces of the real estate meltdown as it buys up nonperforming home mortgages from banks and collects what it can on them. Its new location puts it in the shadow of the former Countrywide processing center in Simi Valley — an ideal position to lure talent away from Bank of America Home Loans, as the operation is now called.
PennyMac has called Calabasas home but recently leased the entire building at 6101 Condor Drive in Moorpark. Chamberlain told the Business Times that the fast-growing firm outgrew its 46,000-square-foot headquarters in Calabasas, prompting the move to Ventura County, where it will occupy a space about three times as large.
The firm will bring its approximately 300 employees over to the new location by the end of the year, he said. It also continues to hire, especially in its mortgage servicing division.
Tom Dwyer of CB Richard Ellis, which represented the landlord in the deal, said in a release that PennyMac’s new Moorpark space provides a “central location” that “gives the tenant access to a strong base of highly skilled employees from a wide geographic area that includes the Conejo Valley, Simi Valley, Moorpark, West Ventura County and the San Fernando Valley.”
Moorpark Community Development Director David Bobart told the Business Times PennyMac’s move is “very good news for the city,” on both the employment and commercial real estate fronts. “It’s been our goal to try and boost our daytime population. It’s important for our city.”
Chamberlain, the PennyMac spokesman, told the Business Times that his firm’s business model is to buy non-performing loans from banks at a significant discount and then work with borrowers on alternatives to foreclosure.
In regulatory filings, the firm said banks are motivated to sell troubled loans, often at a significant discount, to free up capital and clean up their books.
“We believe that the collapse of the independent mortgage company business model and the weakened condition of banks and other traditional mortgage lenders have created additional opportunities for our business,” PennyMac said in regulatory filings.
During the first three months of this year, PennyMac’s Mortgage Investment Trust purchased $243.1 million in such distressed mortgages, according to filings with the U.S. Securities and Exchange Commission. As of March 31, the fund has $840.5 million in total assets.
Investment giants BlackRock and Highfields Capital each own 35 percent of PennyMac’s investment fund, according to SEC filings.
The fund has been profitable almost from the get-go. It experienced a $1.8 million loss for the startup period from August to December 2009, but turned a $24.5 million profit last year. In the first quarter of 2011, it earned $7.6 million.
Countrywide’s rise to a $500 billion home loan giant was built on a practice of mass-producing home loans with little regard to borrowers’ ability to repay them. From the start of the 2000s to the height of the real estate boom, the company built an empire with 62,000 employees and 900 offices that churned out thousands of home loans.
By 2008, the real estate party was over. Countrywide’s financing dried up and the housing market had turned south. After nearly collapsing into bankruptcy, the subprime giant was scooped up by Bank of America in a $2.8 billion shotgun merger.
Now called Bank of America Home Loans, the former Countrywide operation remains significant and includes its Simi Valley mortgage processing facility.
Bank of America also continues to deal with the fallout of the Countrywide portfolio, having paid hundreds of millions of dollars to settle federal charges that the company overcharged struggling homeowners, and buying back toxic loans sold to other investment giants.
In June 2009, the SEC filed civil fraud and insider trading charges against Mozilo and two of his top executives at Countrywide — not including Kurland, who has never faced regulatory action and who has maintained in other media interviews that he took no part in wrongdoing at Countrywide.
As part of a settlement with the SEC, Mozilo agreed last year to pay $67.5 million in penalties and ill-gotten profits. He also agreed to a lifetime ban from serving as an officer of a publicly traded company.
PennyMac isn’t the first Countrywide-connected startup to lay down roots in the Tri-Counties.
As the Business Times reported in February, a new bank being started by Countrywide Bank co-founders James Furash and Mark Suter is quietly raising capital from its base in Westlake Village. It has not yet received a bank charter.
Aris Bank declined to comment for this story. But in a February interview, spokeswoman Julianne Fries told the Business Times that the firm thinks “there are a lot of dislocation opportunities out there in the market.”
• Contact Marlize van Romburgh at email@example.com.