Some new players are entering the fray to profit on sub-prime mortgages. Mortgages are in various stages of default and foreclosure is inevitable. Some big name mortgage lenders are quickly cleansing their books of troubled loans. It costs as much to foreclose and maintain a lower priced house as a high dollar dwelling. Foreclosure costs average between $20,000 and $35,000 per house. Carrying costs can further reduce the value.
Sub-prime market distress created opportunities in the recovery segment where companies like Oxford Funding profit from buying discounted portfolios from national lenders. Oxford Funding buys contracts and loans and does not originate loans directly to customers
Last month that a major mortgage lender agreed to sell Oxford a portfolio of troubled, but performing loans at a discount greater than 35 percent off the face amount. The purchase price of these loans gives Oxford a better than 60 percent loan-to-real estate value based on 2007 appraisals. Oxfords intent is to amend the troubled mortgages for existing borrowers and still make money from the transaction.