Former Countrywide executives cash in on federal housing bailout

by Jeremy Gantz

After overseeing a company at the very center of the still-imploding U.S. mortgage market, a dozen former executives are now poised to make millions from the housing crisis.

Stanford L. Kurland, the former president of Countrywide Financial the bank that has become most synonymous with the bad mortgage lending practices that eventually caused the housing market to burst, setting into motion the current financial crisis and colleagues from the defunct firm now run PennyMac.

The company, headquartered in the same Los Angeles suburb where Countrywide was managed before it was sold to Bank of America last summer, specializes in buying up bad home mortgages that the U.S. government took over from other failed banks, the New York Times reported Tuesday.

PennnyMac has been buying up some of those mortgages for just a fraction of their value, and they keep a portion of whatever money they collect from the mortgage holder.

PennyMac's business has been "off-the-charts good, said John Lawrence, the companys head of loan servicing, the Times reported.

Although the company is reportedly helping many financially troubled homeowners by slashing interest rates for some strapped homeowners, many are angry that businessmen who oversaw a company that ultimately failed in part due to its subprime lending practices can turn around and profit off the housing crisis.

Countrywide was investigated early last year by the FBI, SEC and the Justice Department for accounting fraud, insider trading and possibly misleading security filings.

"It is sort of like the arsonist who sets fire to the house and then buys up the charred remains and resells it," said Margot Saunders, a lawyer with the National Consumer Law Center. The organization has for years sought to limit the sort of abusive lending practices that were employed by Countrywide and other financial companies.

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