They bought a toxic asset
Two radio reporters decide to actually buy an asset chock full of bad mortgages.
But where exactly do you shop for these things? They went to a former Wall Street trader that now manages money in Kansas City, Mo.
After two days of searching, the trader helped them find a good one: A collection of 2,000 mortgages offered by the disaster formerly known as Countrywide. Many of those mortgages are on homes in California, Arizona and Florida. That's about as toxic as you can get.
The asset cost $36,000 -- it was once sold for $2.7 million -- and the correspondents were able to buy a small chunk in January for $1,000.
"A lot of the people in our bond are really struggling," write Chana Joffe-Walt and David Kestenbaum. "Almost half are behind on their mortgage payments, and 15% of the homes are already in foreclosure."
Those foreclosed homes will eventually be sold for a loss, and the bond will shrink, they add. Eventually, the bond will disappear.
"At some point, our toxic asset will die," Kestenbaum says in a radio report. "We just don't know when."
But the reporters are already getting some return on their investment. The last check was for $141, and so far they have received $332. If the bond holds out through Thanksgiving, they said, they could double their money.
You can track the toxic asset here. The reporters are trying to come up with a name for their underwater daughter. How about "Rosie Foreclosie"?
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The solid report comes a month after the retailer closed all of its Canadian operations.
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