The linchpin of the investment firms' business model is the ability to get the new loans insured by the government. If these new loans were a great bargain, then the private market would gladly step in and insure these loans. They are not a great value, so they are sold to the only dumb kid still standing around collecting them.
That dumb kid is YOU, Mr./Mrs. Taxpayer. We will all have to eat these when they turn out to be rotten deals. As the article states, "The transactions also add to the potential burden on government agencies, particularly
the F.H.A., which has lately taken on an outsize role in the housing market and, some fear, may eventually need to be bailed out at taxpayer expense."
Write your Congressmen to complain about this furtive fleecing of the taxpayer. They need to be encouraged to eliminate all forms of government interference in the housing market, as this will truly create "affordable housing".