On Sun, 10 Oct 2010, Doug Henwood wrote:
> So who's been getting all the mortgage payments? If the legal claims are
> not clear, what about the money flow?
The bondholders have been getting the money -- and they are getting it now. The legal claims only come into question when people stop paying and your try to repossess. Only then do you have to prove you own it.
The WSJ had an interesting article about how this pits junior debt owners against senior:
http://online.wsj.com/article/SB10001424052748703843804575534303696918076.html?mod=googlenews_wsj
When homes are repossessed, juniors take a hit and seniors get some value where now flows are closed off. But so long as they can't repossess, the juniors aren't taking the hit and everyone is getting the same flow.
Michael