What I continue to not understand is if these packages of bonds are really tied into the underlying mortgages for the duration or if they are just bought, sold, insured, sold again, etc. for a quick buck and commission. I have experience with hard money loans to people with issues, but the underlying worth of the property always motivated me to do the deal because I felt I could come out whole if things went wrong. I have a couple in BK court right now and expect decent results. The borrowers (developers) only went BK to buy time and they know the worth of the properties are much greater than our loans. I’ll post about them once it closes in the next 6-12 monts, but I get the feeling these CDO’s are just kind of made up products by investment banks looking for a commission and a gamble by their investors.
I appreciated the post and link by the other poster which went in to detail at the Bullion site. Good stuff.
