Why cant mortgage backed securities be split into their component mortgages to determine proper value?

If they could be split, good vs bad mortgages could be repackaged into good/bad MBS's and sold with high and low prices, respectively.





I'm sure this occurred to someone already, why isn't it being talked about?Why cant mortgage backed securities be split into their component mortgages to determine proper value?
There are two levels of evaluation.





First, to re-evaluate each mortgage (and there are a lot of them) would be a painstaking task. You would have to go back to each borrower, get an appraisal on the property and/or collateral, and re-evaluate the credit worthiness of the borrower. Each security could be INVESTED in or merely REFERENCE hundreds of individual mortgages. And it's not just limited to homes, but businesses as well.





Second, it's not easy to unwind or value these securities. Each security can have hundreds of owners and it's not easy to track them all down (especially since they're scattered all over the world). Before you can change the structure, you need all the owners to agree. Even to restructure a single mortgage in a security, you may need permission. That's why banks are asking for political cover before restructuring mortgages. The securities also tend to have a lot of moving parts that requires some complex modeling to value them.





I won't get into specific types of MBSs or how they're structured, but that's the general idea.





The reason the values of MBSs are being questioned is that nobody knows how good the loans were to begin with. See the referenced article below. On top of that, now we have the uncertainty of how bad the economy will get and how high unemployment will go. That makes valuation even more difficult now since ';good'; loans may now be ';bad'; loans. Not to mention you still need people to buy the bad loans and there really aren't a whole of willing buyers right now.





I haven't read it, but Wikipedia has an entry on MBSs.