"It's a relationship rife with the possibility of conflicts of interest"

ChumpChanger with an interesting post about foreclosures:

"I mentioned in the story that two big players, REDC and Hudson & Marshall, have essentially locked up the business of auctioning off the houses that mortgage issuers are foreclosing on.

The question is how these two players have managed to split the market so efficiently. One thing to look at is their relationships with the banks that serve as preferred lenders for their auctions. These lenders seem to be largely the very same ones that financed the houses that are now being foreclosed on in the first place (I wrote about Countrywide's relationship with REDC earlier this year in Slate). It's a relationship rife with the possibility of conflicts of interest. If a mortgage company actually owns the underlying mortgage, it has a great deal of incentive to finance a buyer that will get it out of foreclosure, even if the loan is likely to go bad later. If, one the other hand, it's the servicer for a mortgage that's been packaged into a bond and sold to investors, the big incentive for the company auctioning off the house isn't to get maximum value, but to make sure it gets to finance it (hey, there's not much mortgage business these days). It's a small corner of the real estate market, but it's one that's worth looking into. Though the whole mortgage crisis is feeling a little like yesterday's news with everything else going on, isn't it? "

Not to me. This is one of those issues that needs to be investigated because it could be a continuation of earlier practices which also involved conflict of interest. We cannot leave collusion uninvestigated.