Tanking Of Subprime Mortgage Market A Good Thing For Some On Wall Street

On Tuesday, I put up a post regarding possible legal complications that are arising from Wall Street hedge funds that may impact the ability of financially strapped homeowners with subprime mortgages to negotiate with many mortgage holders the modification of the terms of their troubled mortgages (see Legal Complications Arise In Modifying Troubled Subprime Loans).

While, admittedly, I don't have a clue as to how the Wall Street trading strategies involving the subprime mortgage market work, I am reading that there are Wall Street hedge fund investors that have made "indirect bets against the financial health of struggling homeowners" and that stand to make (additional?) fortunes if the subprime market keeps tanking and financially strapped homeowners "default and get thrown out of their homes." Apparently, these investors are now starting to bellyache at the fact that measures are being taken to stabilize this market, with the intent on keeping these financially strapped homeowners from losing their homes (exactly what some of these hedge funds don't want).

In any event, for those who want a better prospective as to what is going on with these hedge funds in the subprime mortgage market context, see The Sure Bet Turns Bad (Funds Howl As Bear Stearns Buys Mortgages) (reported in The Wall Street Journal Online).

For commentary about the millions of dollars that are reportedly flowing into the campaign coffers of presidential candidates from Wall Street hedge funds, and the questioning of whether there is any connection between this reported flow of cash and the desire of these hedge funds to see a continuation of the tanking of the subprime mortgage market, see The Dangers of Democratic Hedging (Not About Iraq) (The Huffington Post).

Go here for links to other blogs on this story. MortgageServicingIssuesAlpha