The recovery in housing is fueling a niche market for newly minted bonds backed by mortgages on homes on the verge of foreclosure. The investors making money off the bonds include American mutual funds attracted by yields of about 4 percent and quick pay outs. The yields look enticing compared with the current 2.42 percent yield on a 10-year Treasury note. The catalyst for the emergence of the market was a decision by HUD to begin selling some of the most severely delinquent mortgages guaranteed by the Federal Housing Administration to avoid losses to taxpayers. Since 2010, HUD has sold 101,290 soured home loans with a combined unpaid balance of $17.6 billion. Recently, Freddie Mac also sold $659 million worth of troubled mortgages.