Hedge funds opt to be lenders of last resort | Reuters

NEW YORK Future residents of the Cottage Gate development in Middletown, New Jersey, may be surprised to learn their granite countertops and two-car garages were paid for by a hedge fund.

But after Kara Homes Inc. declared bankruptcy in October, hedge fund Plainfield Specialty Holdings provided financing to help the troubled homebuilder keep operating, assuming loans to pay for the construction of individual houses at Cottage Gate and elsewhere.

If bricks and mortar on the Jersey shore sound atypical for hedge funds, think again. These funds are increasingly dabbling i