Angelides to lead distressed mortgage firm
NEW YORK — Phil Angelides, formerly the chairman of a federal commission who led investigations into why the financial markets collapsed, is heading an investment group that hopes to "do a good thing" for America while turning a profit from the wreckage of the housing market.
The startup company, of which Angelides is executive chairman, seeks to raise money from investors to purchase troubled mortgages from banks and other financial institutions in order to help keep homeowners from being foreclosed upon, according to a January 4 letter.
The company, Mortgage Resolution Partners, claims its strategy of using "legal and political leverage" to acquire the loans could generate a 20 per cent annual return for investors. The company intends to purchase mortgages at a steep discount and re-work them to enable the homeowners to continue making payments, with the firm collecting the proceeds.
"We just might do a good thing for America, and along the way get a great return on investment," says the letter to prospective investors. "If our hopes do not pan out, the amount wagered should be a deductible loss." In the letter, the mortgage company refers to its political connections as its "secret formula."
Angelides, a former California state treasurer, Democratic politician and land developer, was head of the Financial Crisis Inquiry Commission until last February.
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Planning for the Mortgage Resolution Partners began last summer, less than five months after the Commission wrapped up its work in Washington, D.C. In January 2011, the Commission issued a 662-page report that highlighted Wall Street's role in the collapse of the US housing market. Emily Lenzner, a spokeswoman for Mortgage Resolution Partners, said the mortgage crisis was affecting millions of families in California and beyond, having a devastating impact on communities and the economy. She said political initiatives had come up short and "Mortgage Resolution Partners is exploring business and public policy solutions to this critical matter."
In a September interview with Bloomberg television on the housing crisis, Angelides said: "The banks unfortunately aren't doing enough to fix the housing crisis." He added: "I think we need to be much more forceful now about modifications. There are millions of people who can stay in their homes if they have principal reductions." — Reuters