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.
(More housing market stories.)
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