Friday, May 20, 2011

Short Selling: Investor Style

According to a White Paper circulated by American Home Mortgage Servicing, a new effort is mounting to allow the short sale of distressed notes out of mortgage backed securities (MBS). This move would allow about $200 Billion of distressed and underwater notes to be sold in block to new investors at a discount. This is similar to what a homeowner would do in a property short sale, but this time it is the investors who are selling short. There are many moving parts to this idea, including application of recent changes to accounting rules and the need for support from the Treasury. However, the benefits are far and wide with the liquidation of these toxic assets to other investors who could then offer modifications or short sales to the home owner that results in a gain to the new investor. Does that sound right? In the accounting world... I guess?

I'm not an accountant, and perhaps other contributors could shed a bit more light on this concept. From a simple read and initial digest of the idea, I think there is much hope here for the help to housing. Read the full story on Housing Wire for yourself and feel free to comment.

1 comment:

lillya said...

Hi friends,

Thanks for sharing this information which i was looking for since many days and finally got it from this site.
Keep on sharing new informations..more and more..