Discount Mortgage Investors May Make Loan Mods Easier

The Los Angeles Times reports:

• [I]nvestors — including big fish such as former Countrywide Financial Corp. President Stanford Kurland as well as smaller fry like [chief executive of G8 Capital Evan] Gentry — are buying loans on the cheap from lenders who want them off their books. By paying less than face value for the mortgages, the new holders can modify loan terms, including shrinking the amount owed, and still make money.

• With some economists projecting 2 million foreclosures this year, legislators and regulators are hoping to encourage use of this model. They want lenders and investors in mortgage bonds to mark down what borrowers owe and provide them with lower-cost loans. It's a tricky business: No one wants to be seen as bailing out speculative buyers or imprudent lenders, but they also don't want mass foreclosures.

For more, see Investors move in to save broken mortgages (Homeowners who owe more than their property is worth are offered new terms) (if link expires, try here).

In a related story, see Twin Cities' Lender Seeks To Buy, Work Out Problem Mortgages.