Is a new type of mortgage fueling a looming national foreclosure crisis?

Wall Street is pouring billions into a fast, easy mortgage product that promises to streamline home buying. However, investigators are questioning whether this financial innovation is a genuine market benefit or a dangerous repeat of the practices that triggered the Global Financial Crisis.

Reporters from The Baltimore Banner have been tracking how this lending trend is impacting distressed neighborhoods in Baltimore. The investigation centers on a mystery involving two local landlords who used these loans to quietly build a massive portfolio of over 700 homes, backed by $100 million in borrowed capital. After amassing these assets, the landlords attempted to disappear, leaving behind a trail of abandoned rowhomes.

The situation in Baltimore serves as a case study for potential national risks. By examining the mechanics of these private real estate portfolios, the reporting highlights how aggressive lending strategies can destabilize local housing markets and why these specific financial instruments warrant closer scrutiny.

Source: The loan at the heart of a new foreclosure crisis | Planet Money