Former Countrywide execs seek to profit on the subprime mess by buying mortgages on the cheap

They profited on the way up and now are looking for the same on the way down: Former Countrywide Financial President Stanford Kurland and some of his former employees are looking to spin gold out of sub-prime straw:

Now, as parts of the mortgage market collapse, Mr. Kurland and some former colleagues have a new plan -- make another fortune on the way down.

On Monday, the group will announce the launch of Private National Mortgage Acceptance Company LLC, or PennyMac, an investment firm formed as a joint venture between asset manager BlackRock Inc., under Chief Executive Laurence Fink, and Boston investment firm Highfields Capital Management.

PennyMac seeks to raise more than $2 billion to buy distressed mortgages on the cheap, work with borrowers to restructure them, and then resell them as performing mortgages at a profit.

PennyMac's plan to profit from the mortgage industry's turmoil is likely to draw fire, especially from those who believe Countrywide's aggressive sales tactics and lowered lending standards helped lead to the subprime-mortgage troubles in the first place.

"The whole subprime mortgage fiasco was built on sort of Wall Street's snake-oil salesmen convincing America this is a can't-miss scheme," says Irv Ackelsberg, a consumer lawyer in Philadelphia who testified to the Senate Banking Committee on lending last spring. "It sounds like they've just morphed into some new version."

PennyMac executives disagree, saying many of them were involved in risk management while at Countrywide and its units and have little to do with the firm's recent problems.

Who Says You Can't Go Home Again? - Wall Street Journal