Flipping mortgages

26 May 2009 By Robert Cyran Follow @rob_cyran

Stanford Kurland made a mint as the number two at lender Countrywide. Now he s looking for $750m to bankroll picking over the wreckage of the mortgage market. Sure, he should be equipped to find bargains for investors. But he and his colleagues will make the more certain return.

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PennyMac Investment Mortgage Trust is seeking to raise $750m from investors in an initial public offering, according to a May 22 regulatory filing.

The real estate investment trust wants to buy distressed housingrelated loans and securities. It is a unit of Private National Mortgage Acceptance Corporation, which was set up by Stanford Kurland, formerly the president of Countrywide.

Countrywide, the mortgage lender founded by Angelo Mozilo, avoided collapse last year by selling itself to Bank of America. Kurland, who was Mozilo's secondincommand, left the mortgage lender in 2006.

The PennyMac REIT will pay an annual management fee of 1.5% of shareholders' equity to PNMAC Capital Management, LLC. The figure excludes unrealized gains, losses or other noncash items that affect shareholders' equity as reported under accounting rules. PennyMac will also pay a 20% incentive fee based on the performance of core earnings, which will also differ from the earnings reported under accounting rules.

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