BUSINESS
10/16/2009 05:12 am ET Updated May 25, 2011

PennyMac: Ex-Countrywide Execs' Firm Making Millions Modifying Bad Loans

Among the servicers participating in the government's mortgage modification program is a new recruit that's not like the others. PennyMac, a firm founded by the former president and chief operating officer of Countrywide, buys distressed home loans on the cheap with the goal of modifying them and later selling them for a profit. The company, whose top management consists mostly of former Countrywide executives, now stands to receive up to $6.2 million in taxpayer money to modify those loans, through the Making Home Affordable program. The government's incentive payments go primarily to the participating servicer, but some of the money could also go to borrowers and investors.

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