Distressed-mortgage investors are descending on troubled Puerto Rico, Bloomberg News reported on Friday. There are big names among them: Goldman Sachs Group Inc. and Perella Weinberg Partners and TPG Capital. What’s luring them is the opportunity to scoop up home loans and foreclosed properties for pennies on the dollar. Many of the homes have spectacular views of the Caribbean that could be pitched to well-heeled Americans — but long-time Puerto Rico investors see trouble ahead. Chief among their concerns: bidding wars are breaking out for the loans at the same time that their quality is deteriorating. The firms are wagering they can strike a deal with borrowers to make the debt viable or go after property in court and resell it. Many have made out well investing in such properties on the mainland, where U.S. housing prices have rebounded about 40 percent from post-crisis lows. Yet investors risk inundating the market with foreclosed properties, driving down prices even further and impeding an economic recovery — a concern to working-class Puerto Ricans hoping to protect the last shred of equity in their homes.
