It’s yet another prime example of “The strong get more while the weak ones slave.” Private equity shops and institutional players are buying and packaging (securitizing) nonperforming mortgages and selling those mortgages to mutual funds and themselves.
On the surface, the U.S. Department of Housing and Urban Development (HUD) wants to minimize the cost to taxpayers. After all, we have to cover the insurance guarantees the Federal Housing Administration (FHA) made on loans it backed but are now nonperforming or in foreclosure.
That’s really nice of HUD and the FHA, thinking about us taxpayers. Maybe they should have thought about us when they agreed to guarantee payment on loans to less-than-prime borrowers who only have to put down 3% to get their loans.
But, whatever, they’re from the government…