Wall Street's reluctance to carry inventories also means that investors who want to sell may need to accept discounts, said Jason Callan, head of structured products at Minneapolis- based Columbia Management Investment Advisers LLC.

Columbia, which oversees $170 billion in fixed-income, has generally eschewed riskier types of housing debt in favor of bonds backed by large prime mortgages issued before 2006, in part because of concerns that liquidity is limited, Callan said.

Limited trading may prove a boon, Neuberger's Sontag said.

"If there's demand for this stuff, if people get hungry for yield in this world of near-zero rates, we could see prices gap upward," he said. "Because there aren't a lot of guys who want to part with bonds carrying yields in the mid-to-low teens."

 

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