Former execs at Countrywide Financial, the realty juggernaut brought to its knees for heavy subprime lending, have reemerged at the helm of a new company that makes its millions buying up bad loans.
Ex-Countrywide President Stanford L. Kurland now heads up the team at PennyMac, a company that buys up loans from bankrupt or ailing banks, or the government, for pennies on the dollar, The New York Times reported.
Since PennyMac buys the loans at a discount the company is able to lower interest rates on them and still pull a profit. Its defenders say that the business helps embattled homeowners.
But critics cry foul over the fact that those who helped take aggressive subprime lending mainstream should be rewarded as the resulting financial crisis reaped havoc across the greater global economy.
“It’s sort of like the arsonist who sets fire to the house and then buys up the charred remains and resells it,” Margo Saunders, a lawyer and advocate against abusive lending practices told the Times.