Source: The New York Times

CALABASAS, Calif. — Fairly or not, Countrywide Financial and its top executives would be on most lists of those who share blame for the nation’s economic crisis. After all, the banking behemoth made risky loans to tens of thousands of Americans, helping set off a chain of events that has the economy staggering.

So it might come as a surprise that a dozen former top Countrywide executives now stand to make millions from the home mortgage mess.

Stanford Kurland, Countrywide’s former president, and his new company have been buying up delinquent home mortgages that the government took over from other failed banks, sometimes for pennies on the dollar. They get a piece of what they can collect.

“It has been very successful — very strong,” John Lawrence, the company’s head of loan servicing, told Kurland one recent morning in a boardroom at PennyMac’s spacious headquarters, opened last year in the same Los Angeles suburb where Countrywide once flourished.

“In fact, it’s off-the-charts good,” he told Kurland, even as the financial markets in New York were plunging.

As hundreds of billions of dollars flow from Washington to jump-start the nation’s banks, automakers and other industries, a new economy is emerging of businesses that hope to make money from the various government programs that make up the largest economic rescue in history.

They include contractors who are supplementing the labor of overworked government bureaucrats, big investors who are buying up failed banks taken over by the federal government and lobbyists helping businesses receive a chunk of the bailout money.

And there is PennyMac, led by Kurland, 56.

PennyMac makes its money by buying loans from struggling or failed financial institutions at such a huge discount that it stands to profit enormously even if it offers to slash interest rates or make other loan modifications to entice borrowers into resuming payments.

Its biggest deal has been with the Federal Deposit Insurance Corp., which it paid $43.2 million for $560 million worth of mostly delinquent residential loans left over after the failure last year of the First National Bank of Nevada.

Many of those delinquent loans resemble the kind that Countrywide once offered, with interest rates that can suddenly balloon.

PennyMac’s payment was the equivalent of about 38 cents on the dollar, according to the full terms of the agreement.

While they have faced criticism, Kurland and his team say that PennyMac’s operations serve as a model for how the federal government, working with the nation’s banks, can help stabilize the housing market and lead the nation out of the worst recession in decades.

“It is very important to the entire team here to be part of a solution,” Kurland said.

It is quite evident that their efforts — and the nascent government program to encourage other private investors to work with lenders — are, in fact, helping many distressed homeowners.

“Literally, their assistance saved my family’s home,” said Robert Robinson of Felton, Pa., whose interest rate was cut by more than half, making his mortgage affordable again, even though he recently lost his job.

But some critics say it is disturbing to see Kurland and his former Countrywide executives in the industry again.

“It is sort of like the arsonist who sets fire to the house and then buys up the charred remains and resells it,” said Margot Saunders, a lawyer with the National Consumer Law Center, which for more than a decade has sought to place limits on what it calls abusive lending practices by Countrywide and other companies.

“Kurland is seeking to capitalize on a situation that was a product of his own creation,” said Blair Nicholas, a lawyer representing retired Arkansas teachers who are suing Kurland and other former Countrywide executives. “It is tragic and ironic. But then again, greed is a growth industry.”