BlackRock, Highfields tackle distressed mortgages

The group’s new company, PennyMac, will acquire and restructure distressed residential mortgage loans in the US.

BlackRock and Highfields Capital Management have established a new company, Private National Mortgage Acceptance Company (PennyMac), to capitalize on the “ongoing dislocation” in the US mortgage market. The company will acquire and restructure distressed residential mortgage loans.

The newly formed company was established by BlackRock and Boston-based Highfields along with a management team of mortgage industry veterans led by Stanford Kurland, chairman and chief executive officer of PennyMac, formerly president and chief operating officer of Countrywide Financial Corporation. The management team also includes chief investment officer, David Spector, the former co-head of global residential mortgages at Morgan Stanley. PennyMac did not return calls for comment.
PennyMac will raise capital from private investors, acquire loans from financial institutions seeking to reduce their mortgage exposures, and create value for both borrowers and investors through distinctive loan servicing. The company “seeks to bring patient capital to the unprecedented distress in residential mortgages,” said BlackRock chairman and chief executive Laurence Fink in a statement.

Jonathon Jacobson, co-founder and senior managing director of Highfields added that there has been much focus on write-downs of mortgage-related securities but “whole loan losses have barely begun to materialize.” It expects the market to see a growing volume of bank-held, non-performing mortgages over the next two to three years. “PennyMac will be extraordinarily well positioned as both a buyer and servicer of these assets,” he said.

PennyMac is based in Calabasas, California.