Buy Buy Buy

Is there a way to buy 'dumped debt'? China and the world economy is 'dumping American debt'. Isn't the price for debt less than the true dollar amount?

Yep.

The U.S. housing/mortgage industry does all the time....and they make lots of money doing it.

Example (oversimplified):

1. Bank A gives/sets up a mortgage with someone. Then Bank A sells the mortgage to Bank B for a profit.

2. The customer (in this example) reaches a point where they cannot or will not make payments on the mortgage...and maybe goes bankrupt.

3. Bank B pawns the "responsibility" for the load to a collection agency. Bank B is "bailed out" by the government and/or insurance and/or tax write-offs.

4. The customer still cannot or will not pay.

5. Bank B, who "technically" still owns the loan sells the loan to Bank C for 70% of the value. Bank B is "bailed out" by the government and/or insurance and/or tax write-offs.

6. Bank C does one of three things...

> Short sale: This probably makes Bank C the lease amount of money, profit being the difference between the 70% loan payoff value and the short sale value.

> Refinance: This is probably Bank C's best bet. They issue a loan for the entire debt of the original mortgage, so make a 30% of the loan value off the top, plus interest payments over the years. But, they will probably sell the loan eventually and end up making between 30% and 60% profit of the loan's value.

> Foreclose and re-sale: Also not bad for Bank C as they will probably sell the house at market value and make 30% profit above the loan payoff.

Sorry...over simplified answer but maybe you get the idea.