Buying Toxic Debt?
Discussion
Some people make a living, well supplement their income
by buying Real Estate tax defaults.
Ok it's small time, one house at a time, but if the loan is not repaid you own the house. That doesn't usually happen because the bank or mortgage company has to step in as they usually have the biggest interest in the house and have to pay the RE tax and interest which you bought at auction.
Or sometimes the occupant of the house magically comes up with the money.
Although in the current climate you could end up with a house you don't want
by buying Real Estate tax defaults.Ok it's small time, one house at a time, but if the loan is not repaid you own the house. That doesn't usually happen because the bank or mortgage company has to step in as they usually have the biggest interest in the house and have to pay the RE tax and interest which you bought at auction.
Or sometimes the occupant of the house magically comes up with the money.
Although in the current climate you could end up with a house you don't want
jeff m said:
Some people make a living, well supplement their income by buying Real Estate tax defaults.
Ok it's small time, one house at a time, but if the loan is not repaid you own the house. That doesn't usually happen because the bank or mortgage company has to step in as they usually have the biggest interest in the house and have to pay the RE tax and interest which you bought at auction.
Or sometimes the occupant of the house magically comes up with the money.
Although in the current climate you could end up with a house you don't want
You see it's this kind of crap that has got us into this mess in the first place. by buying Real Estate tax defaults.Ok it's small time, one house at a time, but if the loan is not repaid you own the house. That doesn't usually happen because the bank or mortgage company has to step in as they usually have the biggest interest in the house and have to pay the RE tax and interest which you bought at auction.
Or sometimes the occupant of the house magically comes up with the money.
Although in the current climate you could end up with a house you don't want
Our financial system got massively too over complicated. What is wrong with a straightforward loan/repayment? Why do speculators have to get involved?
(Not a personal jibe at you Jeff!)
anonymous said:
[redacted]
Well, there are companies who borrow money from the public. The chances of them repaying it is rated by Standard and Poors (to keep it simple). These ratings then determine what level of interest they need to pay to investors to lend them the money (to buy their bonds). Then if they default on the payments it is less likely that they will manage to pay off the rest of the loan (bond), so this becomes bad debt. This can then be bought for a much cheaper price. Given that the company will likely have issued a number of bonds over the year (sought loans) these could all be lumped together in one new bond which has a new risk rating, and this can then be sold (a lot cheaper because of the risk of default). That means the person who had the original loan gets a little bit of money and cuts their losses whilst someone else takes a large risk and buys the bad debt. If this did not happen then as soon as a company missed a bond payment they would go bankrupt as they would not be able to borrow money anymore. Govts also borrow money in this way.
Adrian W said:
Now is there realy such a thing as toxic debt or is it a new undiscovered market that some clever sod is about to create, Commodities,Money,Futures, Stocks and now Toxic.
You are forgettng the Carbon market. More invented bEdited by Adrian W on Monday 23 February 08:35
ks that will go tits up at some point in the future.Markets should be Companies, Commodities, and Currency - nothing more.
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