RENEE MONTAGNE, host:

So six months ago, our Planet Money team of reporters pooled their own money and bought a piece of one of those mortgage-backed securities - a toxic one filled with loans going bad.

Toxic assets, as we all now know, were central to the global financial crisis. Our reporters went in search of some actual homeowners in their toxic asset who haven't been making payments. They went to Florida to find out why.

Here's Chana Joffe-Walt and David Kestenbaum.

DAVID KESTENBAUM: When we bought out toxic asset, it came with this big kind of boring spreadsheet. It lists about 2,000 mortgages, tells you loan amount, loan to value ratio, zip code.

CHANA JOFFE-WALT: There are people in there - those numbers are people - but we had no idea who these people were, just 2,000 random homeowners that some Wall Street guy at some point threw into the same pile. They're not paying us. We haven't known why.

KESTENBAUM: Until now. Meet loan number 294, Richard Koenig, is 81 years in Sarasota, Florida. Doesn't look like a deadbeat.

(Soundbite of laughter)

Mr. ROBERT KOENIG (Homeowner): That's right. I dont have horns and I don't have much hair, and still have a good sense of humor.

JOFFE-WALT: It was actually really hard to find Koenig, a guy who - I mean, I hate to say it but owes us money.

KESTENBAUM: In fact, it was hard to find any of the homeowners in this thing. We had to enlist the help of a local investigative reporter at the Sarasota newspaper. We took 2,000 loans and he spent a day going through public records databases. He tracked down nine of them - nine precious names.

(Soundbite of dialing phone)

JOFFE-WALT: We started calling. One entry in the spreadsheet: a Russian piano teacher and her husband, a car salesman.

(Soundbite of phone ringing)

JOFFE-WALT: Work has been slow for them so they couldnt make mortgage payments, which was sort of the story that we pictured. But then we made another call, Julio Castillo.

Mr. JULIO CASTILLO: Hello?

Mr. JACOB GOLDSTEIN: (Foreign language spoken)

Mr. CASTILLO: (Foreign language spoken)

Mr. GOLDSTEIN: (Foreign language spoken) Jacob Goldstein.

Mr. CASTILLO: Si.

Mr. GOLDSTEIN: Si, bueno.

JOFFE-WALT: Jacob Goldstein is our colleague here who speaks Spanish. He talked to Castillo for exactly four minutes and 30 seconds.

Mr. GOLDSTEIN: (Foreign language spoken)

Mr. CASTILLO: (Foreign language spoken)

Mr. GOLDSTEIN: (Foreign language spoken)

KESTENBAUM: So was he our guy?

Mr. GOLDSTEIN: Yeah, he was our guy.

KESTENBAUM: All right.

Mr. GOLDSTEIN: Yes. Well, he basically said if we want to learn more, we could talk to his lawyer.

(Soundbite of laughter)

JOFFE-WALT: Three more homeowners, three more voicemails, no calls back. The only person who would meet us face to face was Richard Koenig, the man without horns and with a dog named Muffin and a very tidy condo in Sarasota, Florida.

JOFFE-WALT: So you still have keys?

Mr. KOENIG: Oh, yeah. Oh, it's nice.

JOFFE-WALT: Very nice.

Mr. KOENIG: Oh, everything. You cannot believe what was done to this place.

KESTENBAUM: First he took out a mortgage for $300,000, then he invested 150,000 in new cabinets, appliances, new floors...

JOFFE-WALT: Youre forgetting the Venetian plaster.

It's a smaller place than his current home - more manageable. Koenig was planning to move in. But now that housing prices have plunged, he owes a lot more than it's worth.

KESTENBAUM: After he showed us the real live house, we showed him what we brought, the toxic asset paperwork.

This is what it looks like. This is where your mortgage ended up.

Mr. KOENIG: Unbelievable, isn't it? My god. My eyes couldnt accommodate it. I'm not going to live long enough to go through that pile of - pile of poop.

(Soundbite of laughter)

JOFFE-WALT: Did you have a picture of us?

Mr. KOENIG: In my mind?

JOFFE-WALT: Yeah, like when you were writing your checks - who you were sending them to.

Mr. KOENIG: Oh, you mean at the bank? No. No.

(Soundbite of laughter)

Mr. KOENIG: No. To me, banks, unless I know the individual, a bank is a blank face. It's a non-living creature.

(Soundbite of laughter)

Mr. KOENIG: I don't know how else to describe it.

KESTENBAUM: Of course it wasn't a bank or a nonliving creature.

JOFFE-WALT: You were writing checks to us.

Mr. KOENIG: Yeah, but not you personally. Had it been now had you been the recipients on a personal basis after having met you, I'd write you the check. How's that?

JOFFE-WALT: But he didn't know us and he didnt pay his mortgage and he's not going to start now.

KESTENBAUM: That's the funny thing about being an investor. On a spreadsheet Koenig looks like a good bet. He has a perfect credit score, but then you meet him. He's 81 years old, not making as much as he used to, doesn't need a good credit score for anything, so walking away kind of makes sense for him.

Mr. KOENIG: Well, yeah, it went against everything that I was ever taught to believe. You know, you just don't turn your back and say goodbye, good luck. So from that perspective, yes, it did bother me. But if I have to compromise the way I live, I'm really not going to do that, not at almost 82 years old.

JOFFE-WALT: Richard Koenig was what we expected to find in that he bought a house to live in and he loved that house. But driving around Florida that was not true for all our homes.

Mr. MICHAEL BRAGA (Investigative Reporter, Sarasota Herald Tribune): This house is in your toxic asset.

JOFFE-WALT: This is one of ours?

Mr. BRAGA: Yeah, this is one of yours, that's your house.

KESTENBAUM: This is Michael Braga, the investigative reporter with the Sarasota Herald Tribune who helped us track these people down. At the end of our trip he took us to this house that looked like no one had ever loved it.

Mr. BRAGA: It looks like there's no one is here because the blinds are all down. The pool is a little green which means that they haven't put chlorine in it.

JOFFE-WALT: I can peek inside.

Mr. BRAGA: Inside there's some nice, white couches and a bar that looks into the kitchen. And, oh, and it looks like a Brady Bunch staircase that leads up to the second floor.

JOFFE-WALT: This house was foreclosed on nine months ago. We called the person who took out the mortgage several times, Derek Taaca, but he never called us back.

KESTENBAUM: Braga knows a little bit about him though. Taaca is a local lawyer and a purple belt jujitsu martial artist and he owned several properties.

Mr. BRAGA: And ultimately, Derek Taaca ultimately defaulted on five loans totaling $3.6 million including the $991,000 loan that is in your toxic asset.

JOFFE-WALT: Of the nine people we tracked down, three were investors like Taaca, meaning they were not like our piano teachers struggling to pay for a dream home. They were speculators.

KESTENBAUM: After we got home, we found out something else. One of the nine mortgages is listed in an FBI affidavit. Allegedly, it's fraudulent and tied to a ring of investors who may have lied to the banks to get loan after loan after loan.

JOFFE-WALT: And that group, Braga told us, has defaulted on $120 million in loans.

KESTENBAUM: So Chana, remember we said our toxic asset could be like an encyclopedia of the financial crisis?

JOFFE-WALT: I do.

KESTENBAUM: Well, we've got a struggling piano teacher, a retired guy who's not even trying, some speculators, and an FBI affidavit. It sounds about right.

JOFFE-WALT: Well, David, you're forgetting the investors who had no idea what they were buying and lost half their money.

KESTENBAUM: Yeah, that would be us. David Kestenbaum...

JOFFE-WALT: And Chana Joffe-Walt, NPR News.

MONTAGNE: Our Planet Money team brings you more on those mortgage speculators later today on ALL THINGS CONSIDERED. You can track the health of Planet Money's toxic assets at npr.org/toxic.

(Soundbite of "The Brady Bunch" theme music)

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