In December 2008, in the midst of the worst financial crisis since the Great Depression Rosetree Capital Management was evaluating the purchase of a pool of U.S. residential mortgages. The company was formed to acquire an investment instrument to troubled residential mortgages from banks and other motivated sellers. The idea was to acquire mortgage loans at a discount and to work with individual borrowers to restructure their debts. Performing mortgages could then possibly be resold in the second … Read more »

In December 2008, in the midst of the worst financial crisis since the Great Depression Rosetree Capital Management was evaluating the purchase of a pool of U.S. residential mortgages. The company was formed to acquire an investment instrument to troubled residential mortgages from banks and other motivated sellers. The idea was to acquire mortgage loans at a discount and to work with individual borrowers to restructure their debts. Performing mortgages could be sold in the secondary market may be. The case provides cash flow forecasts in different economic scenarios, which are revealed by the economics of troubled mortgages and home foreclosure. Rosetree needed to decide whether and how much to offer for the loans.
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from
Victoria Ivashina,
Andre F. Perold
Source: Harvard Business School
14 pages.
Release Date: 5th December 2008. Prod #: 209088-PDF-ENG
Rosetree Mortgage Opportunity Fund HBR case solution