Yes. Collection agencies normally are used for unsecured debt. Mortgages are secured by real estate.

There has always been a brisk market for real estate paper ("notes"). This might be someone that lent on a second mortgage and now needs his cash back, so he enters the note market and takes a hefty discount to turn his stream of income into a lump sum. Or someone that just sold their house with owner financing, and wants to be free of the hassle of servicing the loan for the next fifteen years, so they sell on the open market. Supply and demand determine the prices, and the discounts are easily 40% off the net present value of that mortgage note's stream of income.

The thing I'm most confused about the whole article is how did some homeowners go years (a decade?) living in their home without paying a mortgage and not get evicted? The article implies this is happening but I didn't realize any lender allowed that amount of time to pass.

I assume the properties were so devalued that it literally wasn't worth the bank's time to foreclose and try to sell, nor to keep hassling the non-paying borrower.