According to Realtytrac the number of actual repossessed properties in August was 95,000. They also have reported that in the second quarter the number of repos was 248,000. Call it a million over the last 12 months. "How many of these are now tainted" is a central question. But for me the more significant issue is, "Why were they were tainted".

Assume there is a home that has a $250,000 mortgage and the loan is in default. Now assume that the owner of that mortgage wants to sell it. Assume further that the mortgage is bundled up with a bunch of other busted mortgages and sold at a deep discount from par. Say the price of the loan package is 40 cents on the dollar. Now finally assume that the property can be sold at an auction level price of $175,000.

If you add up all my assumptions you get a situation where the mortgage is purchased for $100k (250*.4) and the actual value of the assets securing the mortgage is worth $175k. That 75k for a “flip” is big money if there is a lot of them to be done.

What I describe is happening in very big numbers. Busted whole mortgage loans are being packaged and sold to investors to the tune of at least $10b a month. Some of the biggest players on Wall Street are in the game of arbing the sellers. Packages are regularly being put together and sold. Who are these sellers? A lot of the banks. The big ones have sold large amounts, the smaller banks have sold regional portfolios at distressed prices. But by far and away the biggest sellers that have created the “profit window” all reside in D.C. A big seller has been the FDIC. Fannie, Freddie and FHA have also been steady sellers.

I think we've just seen the tip of the iceberg regarding what's really going on in the housing market and particularly with foreclosures. The scenario the author of this article describes is one explanation of what is happening to the so-called "shadow inventory."

It seems that greed and making big profits always finds a way no matter the situation...not much profit to be made in truly helping homeowners.