Mortgage 'Vultures' Keep Defaulting Owners in Homes

You might think a vulture is the least likely creature to help you save your home. But there's a group of vultures who are doing just that -- in fact, they're being more of a friend, to many homeowners in trouble, than banks are.

One of them, mortgage-bond trader Lewis Ranieri, has developed a method to keep troubled borrowers in their homes by buying up mortgages at distressed prices, lowering principal balances and helping people make payments on time.

His firm, the Selene Residential Mortgage Opportunity Fund, is one of several working in the distressed market arena that are actually having great success helping homeowners stay out of foreclosure. Three others are in the same game: hedge fund Fortress Investment Group; Wilbur Ross, a well-known buyer of distressed assets; and Jeff Kaplan of National Asset Direct. All four buy mortgages on the cheap and write down principal to give underwater homeowners a reason to want to stay in their houses.