Los Angeles Business Journal

PennyMac To Offer Residential Mortgage Bonds

By Deborah Crowe Tuesday, April 23, 2013

PennyMac Mortgage Investment Trust on Tuesday said it plans to issue its first residential-mortgage bonds starting in the third quarter.

The Moorpark real-estate investment firm joins other companies issuing bonds to finance residential housing without a government guarantee. Since its founding in 2009 by former executives of Countrywide Financial, PennyMac has mainly focused on distressed investments and government-backed home programs.

The trust hopes to tap interest by investors in the jumbo loan market. Jumbo loans cover balances above the ceiling for government-guaranteed loans. The ceiling averages $417,000 nationally but is higher in more expensive markets such as California.

"We are making steady progress in the expansion

of our presence as a jumbo aggregator," Chief Executive Stanford Kurland said during a conference call with analysts. “Private-label securitization of jumbo loans is a significant new opportunity for PennyMac.”

PennyMac would securitize the bonds by selling some to other investors and keeping a riskier subordinate portion. The company expects leveraged returns of 12 percent to 19 percent on the subordinate portion.

PennyMac earlier reported first-quarter net income of $53.3 million (90 cents a share), beating the Wall Street consensus of 82 cents. Year-earlier results were not given in the release, but earlier reports said the trust earned 65 cents a share in the first quarter of last year.

PennyMac Mortgage shares closed up 9 cents, or less than 1 percent, to $24.22 on the New York Stock Exchange.