IDD Magazine (03/10/08); Rozens, Aleksandrs
Mission Capital Advisors, a firm that helps lenders unload problem mortgages, has seen its sales rise to $5 billion during the past year from $1 billion per year in a typical market. Lenders increasingly are selling whole loans—which, essentially, is unsecuritized debt—as bond pools containing subprime and Alt-A mortgages are no longer in demand; and Mission Capital co-founder Joseph Runk says lenders are fielding bids for much less than they believe the debt is worth. Runk notes that investors would pay 80 cents to 85 cents on the dollar two years ago for a $100 million subprime mortgage pool containing delinquent mortgages with 85 percent loan-to-value ratios and credit scores ranging from 600 to 650, but the same pool now attracts bids for just 60 cents on the dollar. Experts attribute falling prices to the economic downturn, high consumer debt loads and the inability of borrowers to refinance due to rising interest rates and home-price declines.
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