The current financial crises stems primarily from mortgage loans made to sub-prime borrowers.?
Many people argue that these mortgages need to be re-negotiated or written in order for the borrower to be able to pay back the loan and not go into foreclosure. Some banks have been able to do when the loan is still on their books, meaning they still own the loan. However, most mortgage loans are sold to other lenders and packaged into mortgage backed securities. This involves the assignment of the rights and payments of the loan to a second group of investors. Those investors now own the rights of the loan in the form of many mortgages in one security.
how realistic is it that these loans now in a trust supporting the security can be renegotiated. What impact would the re-negotiation of the individual loan have on the investor?