The imminent arrival of two big buyers for distressed mortgages — the Treasury Department and Goldman Sachs Group Inc. — is having little or no effect on prices.

If anything, prices for some types of "scratch and dent" loans have continued to fall, market participants said, because the cost of maintaining the assets keeps rising. State and local ordinances restricting foreclosures, and the continued drop in real estate prices in hard-hit states like Florida and California, have made it harder to profit from buying these loans, even at steep discounts.

The government's proposed Troubled Asset Relief Program, unveiled last weekend, would buy up to $700 billion of illiquid assets from financial institutions; the Treasury has said these could include both residential and commercial mortgage-backed securities and whole loans.

This week Goldman converted to a bank holding company, lined up a $5 billion infusion from Warren Buffett's Berkshire Hathaway Inc., and raised another $5 billion through an offering of common shares. A source at the Wall Street firm said Wednesday that it might consider, among many potential investments, buying assets like those on the books of the failed IndyMac Federal Bank. Goldman has the capacity to manage and work out such assets, having bought Litton Loan Services LP last year.

Still, this week "there's been no change in pricing, but I think that's because the plan is so nebulous," said Jon Daurio, the chairman and chief executive of Kondaur Capital Corp., a Santa Ana, Calif., buyer of scratch-and-dent mortgages.

"We're not convinced Treasury will buy whole loans instead of mortgage-backed securities, and we really don't know what effect it would have on the trading of mortgages — it could both increase and decrease discounts," Mr. Daurio said.

Discounts might rise, he said, because before they could sell to the Treasury program assets classified as held-for-investment, banks could have to reclassify them as held-for-sale.

As soon as it became known that such assets were now for sale, the additional supply on the market could depress prices, Mr. Daurio said.

Jim Callahan, the co-founder and executive director of Pentalpha Group, a Greenwich, Conn., advisory firm that specializes in pricing and workouts of distressed loans, said the market for such loans has gone "from no trading to a paltry amount of trading, so you can't say the market is back again."

Terry Couto, a partner in the Tampa office of Newbold Advisors LLC in Bethesda, Md., said the Treasury proposal has had "no impact on prices yet because there's really not a lot of people buying. Most are trying to sell and deleverage.

"The market thinks the whole Paulson $700 billion buyout will ultimately be smaller and the impact will be less effective and won't solve all the problems because we still have the underlying problem of consumers with mortgages they can't afford," Mr. Couto said.

The scratch-and-dent market covers a wide spectrum of mortgages, from performing loans with underwriting glitches to loans that have defaulted. Many investors have been burned because they bought assets from 2005 to 2007 and were unable to sell.

Pricing information is hard to come by and varies depending on the type of loan.

One scratch-and-dent buyer, who spoke on condition of anonymity, said bids for performing loans are trading between 55 and 65 cents on the dollar and that nonperforming first-lien assets are trading at from 35 to 40 cents.

Performing second liens are trading at 6 to 8 cents on the dollar, this buyer said.

"No one really has any idea what it would take for the government to buy these assets," the distressed asset buyer said. "What assets would they buy, and how would they determine the value? And how are they going to service it and dispose of it?"

Mr. Callahan said the government will run into problems valuing the assets.

"Virtually every loan prediction model out there didn't work because, if it worked, we wouldn't be in the situation we're in," he said.

It is also unclear whether the hedge funds and private-equity firms that have been buying these assets would be eligible to sell to the government through the program. At a Senate Banking Committee hearing this week, Treasury Secretary Henry Paulson would make no guarantees. "We want to deal with regulated financial institutions on a broad basis," he said, however.

Mr. Daurio estimated that, with nearly $12 trillion of loans outstanding — half of it in mortgage-backed securities and half in whole loans on bank balance sheets — the Treasury would have a "marginal" impact with just $700 billion of purchases.

"Whatever ultimately gets passed [by Congress] could be so watered-down that it really might not have a dramatic effect," he added.

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