Posted by Yen Ho
The feds are now buying bad mortgage loans owned by banks, planning to split a portion of the costs with private investors. This brings $500 billion in toxic mortgages up for grabs, with investors taking roughly half the profits.
The bottom line question is this: Are these delinquent loans still collectible? Can the buyers get any money back from the consumers that got the loans in the first place, or sell the home for more than the mortgaged amount? This is the only way to profit on this deal, other than selling off the noncollectable loans at a higher price to other investors down the road (an unlikely notion).
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