NPR's New Pet: A Toxic Asset

Reporters buy a window into the financial crisis
By Nick McMaster,  Newser Staff
Posted Mar 12, 2010 5:54 PM CST
NPR's New Pet: A Toxic Asset
This undated photo released by Terry Hoskins, who allegedly bulldozed his own home after a bank began foreclosure proceedings, shows a bulldozer standing near Hoskins' home in Moscow, Ohio.   (AP Photo/Terry Hoskins via WLWT)

Despite being widely blamed for the financial crisis, the bundled mortgage bonds commonly known as "toxic" assets still exist, and trading is beginning to recover. In hopes of getting a new perspective on the financial crisis, NPR's Planet Money decided to buy a toxic asset. After some searching—the assets' murky nature means that price spreads are huge—they settled on a $1,000 stake of a $36,000 bundle of 2,000 American mortgages.

At one point, the bond was worth $2.7 million. But now nearly half of the homeowners are behind on their payments, and 15% of the homes are in foreclosure. The borrowers come from states synonymous with the housing crunch: California, Florida, Arizona. As these homes fall into foreclosure, the bond disappears. But the authors, who bought with their own money, just got a check for $141 from homeowners still making their payments. "If it goes to Thanksgiving, we could double our money," they conclude.
(Read more housing market stories.)

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