Quote:
Originally Posted by Realist_Classic
Nobody wants to buy them and it's next to impossible to put a price tag on them. If I'm understanding things correctly, it's the toxic papers' underlying assets--the subprime mortgage loans--that makes the papers "toxic." The paper's worth nothing if the mortgage loans can't be paid.
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not entirely, these papers are still back by the house the mortgage for. if the borrow defaults there is still the company holding the paper still have the house. The problem is that no one knows what these papers are worth because market is still dropping. Once the house market stablize the company put a actual price on these papers they will sell.
Also it is not just sub-prime loans that are the cause of trouble, it is the variable loans and house flipper who walk away form thier mortgage because the house is worth less then the loan and people who refi thier house during the boom and now found there new mortgage is more then the actual value of the house.