A decade after the financial crisis, there is a new breed of risk-takers in the U.S. housing market. During the boom before the bust, lenders made mortgage loans to countless buyers who couldn’t afford them. Lenders later wrote off many of the loans, but borrowers’ obligation to pay remained. Today, in an improved economy, a group of individual investors, plus some Wall Street giants, is buying these old loans and trying to tease value out of them, the Wall Street Journal reported. The investors buy non-performing mortgages available for very low prices. The investors then track down borrowers, let them know they have a new creditor and tell them they need to resume payments, at least at a partial level, perhaps offering to modify terms. If necessary, the investors threaten foreclosure, but if all goes well, they collect on the debt or resell the mortgage as a now “reperforming” loan. The process marks a new chapter for hundreds of thousands of crisis-era borrowers who often had heard nothing about their unpaid loans for years and thought the debt had been disposed of. For investors, legal wrangling with such borrowers is common.
