Posted by John Corey on June 18, 2007 at 04:02:37:
It does not matter what you believe,
It could be true that more money would be made by the note holder if
they agreed a short position. That may not be how they have set up
their process. The risk of a screw up is too great so they go with what
they know will work even if some of the time they recover less.
These are large firms with lots of deals to manage. Efficiency in process
is not always the most profitable when you look at individual deals.
They make up for the lack of profits (reduced losses) in individual deals
by servicing more loans and having a lower cost of funding than the