As millions of Americans struggle to hold on to their homes, Wall Street has found a way to make money from the mortgage mess.
Investment funds are buying billions of dollars’ worth of home loans, discounted from the loans’ original value. Then, in what might seem an act of charity, the funds are helping homeowners by reducing the size of the loans.
But as part of these deals, the mortgages are being refinanced through lenders that work with government agencies like the Federal Housing Administration. This enables the funds to pocket sizable profits by reselling new, government-insured loans to other federal agencies, which then bundle the mortgages into securities for sale to investors.
While homeowners save money, the arrangement shifts nearly all the risk for the loans to the federal government — and, ultimately, taxpayers — at a time when Americans are falling behind on their mortgage payments in record numbers.
For instance, a fund might offer to pay $40 million for a $100 million block of mortgages from a bank in distress. Then the fund could arrange to have some of those loans refinanced into mortgages backed by an agency like the FHA and then sold to an agency like Ginnie Mae, a government-owned corporation within the Department of Housing and Urban Development, which guarantees investors the timely payment of principal and interest on mortgage-backed securities backed by federally insured or guaranteed loans.
see source post here.
Related Post :
Other post:
- Saving Money through Student Loan Consolidation | e-commerce ...
- I need a reliable payday loan asap not a web site that acts like a middle man?
- BACK SLASH » Blog Archive » Grab the Auto Loans Despite Bad Credit
- WE DO HARD MONEY LENDING - Forum Topic | BiggerPockets.com
- Get a FREE Online Auto Loan Quote before Visiting a Dealership ...
