Vulture fund PennyMac Mortgage Investment Trust earned $7.3 million in the fourth quarter, compared to a $1.1 million loss in the same period a year ago.
The publicly traded REIT said it bought $148 million of distressed mortgages during 4Q and then paid out an additional $69 million to buy whole loans just after the year ended.
The Calabasas-based company, as a policy, does not typically identify which firms it buys assets from. However, speculation has focused on Citigroup which is lending money to the nonbank through a master repurchase arrangement.
At yearend PennyMac held $368 million of residential whole loans, and $120 million in MBS.
The firm also has lined up $75 million of financing to buy newly originated prime mortgages through its conduit.
In a statement, company CEO Stanford Kurland said the firm's "whole loan portfolio continues to produce strong cash flows as loans move through the liquidation process. Loans that were liquidated in the fourth quarter were held, on average, in the portfolio for six months."
He said "many" of PennyMac's non-performing loans continue to move closer toward a "liquidation event and this is reflected in gain on mortgage loans for the fourth quarter of $8.5 million. As our non-performing loans move closer toward liquidation, their value generally increases as the certainty of liquidation increases."
