PennyMac Mortgage Investment Trust (PMT) started on a new securitization to provide additional capital and increase its investment capacity.
While there is no guarantee that the securitization will be done, PMT is targeting its completion in 2Q10.
In addition, the mortgage whole loan portfolio will continue to produce cash flows as current loans pay down and nonperforming loans become resolved. The firm’s short-term MBS, valued at $76 million, may also be re-invested into higher yielding, longer-term residential whole loan opportunities as they happen.
“Market activity for nonperforming whole loans accelerated throughout the first quarter, and continues to accelerate into the second quarter of 2010," said Stanford Kurland, chairman and chief executive officer of PMT. "Our investment manager was well positioned to capitalize on this increased activity and, as a result, PMT successfully completed five whole loan acquisitions in the first quarter, deploying $115 million in capital. PMT also purchased an additional residential whole loan pool in April for $71 million.
Aside from the firm's purchase of distressed whole loans, Kurland said they are "moving forward with our prime agency conduit, having purchased our first loans into the conduit in April. We expect to proceed gradually with our conduit business throughout the rest of 2010. As PMT builds out its capabilities, we will continue to look to play an integral role in the re-emergence of the mortgage market; however, the company plans to proceed at a measured and patient pace, consistent with the approach used in our acquisitions of mortgage whole loans.”
He added that the market is starting to see signs of real estate value stabilization, with the economy showing some signs of improvement.
"The securitization market is starting to make a comeback as well, with a recent announcement of the first newly originated jumbo securitization in approximately two years," he said. "We are encouraged by these events and feel that PMT is well positioned to capitalize on the variety of opportunities that will arise as the markets continue to improve.”
The company today reported net income for the 1Q10 of 2010 of $1.3 million, or $0.07 per share, on total net investment income of $3.9 million.
In 1Q10, PMT bought five residential mortgage whole loan pools valued at $115 million in aggregate, with unpaid principal balances at the time of purchase of $208 million. The loans from these purchases were primarily non-performing loans with 86% of the loans either 90 days or more delinquent, or in the foreclosure process.
These deals bring the total value of PMT’s residential mortgage whole loans and RMBS as of March 31 to $200 million. PMT also closed a transaction in April, after the end of the first quarter, to purchase an additional mortgage whole loan pool of nonperforming loans valued at $71 million with an unpaid principal balance of $141 million.
During the quarter ended March 31, PMT recorded net investment income totaling $3.9 million. With the closing of its $71 million transaction in April, along with its previous loan and securities acquisitions, PMT has now deployed a substantial amount of the initial capital raised in its initial public offering.