Hedge funds have been helping some homeowners in New York and New Jersey out of a jam by acquiring delinquent mortgages. The firms intend to avoid the legal foreclosures process with homeowners who agree to settle or pay investors to leave.
Borrowers are said to be more likely to pay their mortgages under this set up. The reason? Hedge fund firms have more leeway than traditional banks to cut deals with homeowners. Chicago-based investment firm American Homeowner Preservation, for example, does not require documentation to sign off on a sale or loan workout. The firm is close to purchasing 2,700 more loans and currently owns about 1,000 mortgages. Neuberger Berman Group LLC is another investor rapidly snatching up delinquent loans.
“They’re a lot more flexible than a bank,” Louis Ragusa of Blackwood, N.J., who received help from American Homeowner Preservation. “They can work with you because they’re a private company and they can basically set their own rules.” [Bloomberg News] — Mark Maurer