PennyMac Mortgage Investment Trust has entered into an agreement with Bank of America to fund up to $550 million in new mortgages.
The Charlotte, N.C. bank has agreed to buy existing mortgage loans from the Moorpark real estate investment trust, with the proceeds used to buy newly originated mortgage loans from correspondent lenders, according to a filing with the Securities and Exchange Commission.
The REIT primarily invests in distressed residential mortgages and other mortgage-related assets but also does correspondent lending, originating and packaging loans for sales to banks.
The agreement with Bank of America contains a provision guaranteeing the loans’ values through Jan. 30, 2015. It requires the REIT to transfer cash or additional eligible mortgage loans to accommodate for any potential decline in the market value of the purchased mortgage loans.
The REIT also may repurchase the loans from the bank, paying the principal plus accrued interest, a commitment fee and certain other administrative costs and expenses.
The REIT is the sister company of PennyMac Financial Services, a producer and servicer of U.S. residential mortgages. Stanford Kurland, the former president of Countrywide Financial, is chief executive of both companies.
Shares of the REIT closed up 6 cents, or a fraction of a percent, to $21.85 on the New York Stock Exchange.