Lone Star is not alone in buying up super discounted mortgage assets right now. Business Week Online notes a host of hedge funds and private equity firms are busy buying up thousands of mortgages at huge discounts. Many are not looking to flip immediately. (Unless the price is right, of course). Instead, they want to do what banks have proven pretty awful at: work with mortgage holders. Lone Star has made a specialty out of this. They paid very little for the loan, which makes the effort worthwhile. Sure, they'll end up with a lot of foreclosed-on property, but the steep price drops may have bottomed. They just might be entering a bouncing market. It's unclear if this will have a meaningful impact on the residential housing economy. But if it can keep more homeowners from defaulting, and the market turns up, they just might make a tidy profit.  

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