Ok, but what if you can service your debt? What if they are selling your 300k mortgage for effectively 50 to 100k?
You could find financing for 50 to 100k, especially if you have a 300k house as collateral as part of it.
Only the other bank gets the sweetheart deal.
Same kind of problem with foreclosure auctions too btw. They require cash up front for those, you cant put a mortgage on a foreclosed house. (without it first being bought outright by the bank, who isnt gonna mortgage it to you for the foreclosed price)
Further, in most times MBSes are usually worth more than the debt - otherwise, modern banking wouldn't make any sense.
Mortgages issued in the last 2 years at ~2.75% are probably worth less than the debt now. So it might actually be the case for a lot of these loans.
That being said, the discount is not going to be anywhere close to 50%.
The difference in the discount would be evened out by the difference in the interest rate you'd have to refinance at almost exactly.
Considering the cost of refinancing, if you bought your own debt with some new debt from some new mortgage company - this would be a losing proposition for 99%+ of mortgages.
They definitely aren't selling your 300k mortgage for effectively 50 to 100k if the assumptions you make hold (e.g. there actually is a 300k house as collateral), so the whole premise is flawed.
First, it seems they're selling at something like 85%, so they're selling a $300k mortgage for something like $250k.
Second, the main reason they're selling because these collaterals have fallen in value and so it now would be much less than $300k.
Third, any $300k mortgages it would be possible for you to get financing for the $250k simply would not be sold as part of such a discount package (because those are likely worth the full $300k or close to that), the discounted sale gets those loans for which they (knowing all the data) know that an equivalent financing won't be granted in this market - because anyone who'll grant you a $250k financing will rather buy the same thing from a lender for more than $250k as part of a large scale package deal with less overhead; refinancing is a reasonable option only if they can lock in a much better interest rate and thus make it more profitable.
Just because someone is selling 10 homes with a nominal mortgage value of 3 million total for 500k to a million does not mean that you can bid 50k on a single home from that pack. This stuff is always packaged and you need to buy the whole thing, maybe dig through it, pick out stuff you like, repackage the rest and sell it off. The troubled mortgage lender likely isn't even selling good loans initially, they will first try to recapitalize by dropping the garbage, and will only sell quality assets when they are really pressed to do so.
You could find financing for 50 to 100k, especially if you have a 300k house as collateral as part of it.
Only the other bank gets the sweetheart deal.
Same kind of problem with foreclosure auctions too btw. They require cash up front for those, you cant put a mortgage on a foreclosed house. (without it first being bought outright by the bank, who isnt gonna mortgage it to you for the foreclosed price)