TAMPA - Instead of foreclosing, some lenders are selling their portfolios of bad loans at auction.

And the more troubled the borrower, the higher the price an investor is willing to pay, said Tom McCarthy, managing director of New York-based The Carlton Group.

The thinking is that when the loan fails, the new owners of the loan can foreclose and then flip the property for a profit.

Carlton has held auctions for such loans across the country and now has $98 million in bad loan pools for sale. McCarthy would not give specifics on how many Tampa Bay area properties are included in the sale, but he said there are several and they are high-end homes.

As cruel as it sounds that the buyers will gain if the loans fail, McCarthy said, investors willing to buy the loans will benefit the overall housing market.

"This cleans up bank balance sheets," he said. "The lenders will then be more comfortable loaning money when they don't have as many bad loans."

What does this mean for homeowners wanting to avoid foreclosure?

"It may mean they get to keep their home after all," McCarthy said. "The loan will now be in the hands of someone willing and able to do something about it, to work with the owner."

Investors would still make money, he said, because they are buying the loans at such a low price. If the borrowers pay in full, they'll get their money back plus profit. If they default, they'll get the property and sell it later when the real estate market improves.

McCarthy said he expects more lenders to auction bad loans this year.

Bids are sealed and due by July 10. For information on the assets or to bid, call McCarthy at (561) 207-6240.

Reporter Shannon Behnken can be reached at (813) 259-7804.