... ``You buy the mortgage for pennies on the dollar, carry the big stick, tell the homeowner how it's going to be, then double your money very easily,'' Gutierrez said.... The homeowner was $365,000 under water after buying the house with no money down in June 2005, according to a spreadsheet listing about 30 loans for sale by a national mortgage servicer that Gutierrez referred to in his truck. If Gutierrez bought the note for 20 cents on the dollar, or $73,000, he could probably get the owner to leave by giving her $5,000 for moving expenses, then sell the home for about $150,000, well below even the neighborhood's declining market value, he said. That would leave him a profit of about $70,000.
... Gutierrez said he'll probably offer the homeowner enough cash to pay for a mover and a couple of months in a rented apartment because, he said, many of them want to get out but don't have the money.
``I'm considered a bottom feeder,'' Gutierrez said. ``That's the way bankers see me. They only want the best loans, the loans that are paying. That's nice, but there's no money in it.''
... At a one-story, L-shaped stucco house in Imperial Beach with four-foot-tall rose bushes and an American flag hanging from the garage, 62-year-old Armida Leos answered the door. Her 73-year-old husband, Gilberto, a former U.S. Border Patrol officer, had to quit retirement and get a job as a security guard when their monthly mortgage payments jumped to $3,200 from $2,400, she said.
``I feel really bad for my husband because he worked his heart out to get us into this house and now we're losing it,'' Leos said.
Gutierrez's spreadsheet said the Leos family owed $455,000 on their mortgage. Leos said she and her husband spent $50,000 fixing up the house when they moved in three years ago. They had just received notice from San Diego County that their property tax was being reduced because the house had been assessed for $193,000.
Back in his pickup truck, Gutierrez said he was prepared to offer Leos and her husband $5,000 to move out. He made note of the town's falling home prices and how the house didn't seem to be that big.
Interesting story about a guy who saw a need and had the funds to fill the void. While he may be a "bottom feeder" he is helping resolve some of the problems. You may not like his business (like a repoman) but he did not cause the problems just trying to clean it up.
PennyMac is headed by Stanford Kurland, former president of Countrywide Financial Corp., the largest U.S. home lender and mortgage servicer. Kurland was the one-time heir apparent to Countrywide CEO Angelo Mozilo.
The new company will avoid foreclosing on borrowers, said Mark Suter, PennyMac's chief portfolio strategy officer. Aside from the social cost of foreclosure -- vacant homes are eyesores and magnets for vandals, and they can bring down home values in the area -- Suter said it was more expensive to take over ownership of a home than it was to get a borrower to start paying the mortgage again.
``We don't want to provide a Band-Aid that will fall off,'' Suter said in an interview. ``We want to create permanent solutions to borrowers to stay in their homes.''
If Gutierrez is considered a bottom feeder, how would one classify Kurland? He was the head of what many people consider the epicenter of the housing bubble. Pushing bad loans that were helping to drive up prices. Kurland was with Countrywide from 1979 to 2006 - he was Angelo Mozillo's deputy. With all the news reports surrounding the FBI investigating Countrywide, (see here, here and here) but Kurland probably was not involved with any of those shenanigans, right? Instead Kurland has decided to profit from the other side of the bubble. After 27 years of selling loans now he is making money buying them back. Who is the real bottom feeder in this article?
Update from Marketwatch -
A federal judge in Los Angeles has ruled that besieged mortgage lender Countrywide Financial Corp.must face a shareholder lawsuit against 14 current and former top executives and board members that alleges the company engaged in risky lending practices that led to its collapse this fall. "It defies reason, given the entirety of the allegations, that these committee members could be blind to widespread deviations from the underwriting policies and standards being committed by employees at all levels," wrote Judge Mariana Pfaelzer of Federal District Court in Los Angeles.
Which 14 current and former executives - I am unable to find list of all 14 plaintiffs anywhere. Anyone know please post in comments. Thanks!