The Wall Street Journal has a noteworthy investigation today, and one that I thought was worth flagging.

Essentially, it found the borrowers whose home mortgages were the underlying collateral in Goldman Sachs' Abacus 2007-AC1 CDO deal. That's the CDO that is now the subject of the SEC's civil-fraud charges against Goldman Sachs.

Finding these homeowners could not have been an easy process. The Journal looked through the Abacus pitchbook and found the 90 bonds that were in the portfolio. Then it matched them with "court records, foreclosure listings, title records, and loan servicing reports" to find the 500,000 mortgages that ultimately, hedge fund manager John Paulson bet against.

But he wasn't just betting against mortgages. He was betting specifically that those homeowners--or at least most of them--would not be able to pay their mortgages, resulting in losses significant enough to yield big profits through his credit default swap. And he turned out to be right. Many homeowners struggled to pay but couldn't. Paulson, as a result, made $1 billion off his bet against them.

The Journal found that of the 500,000 mortgages bundled and stuffed into that one CDO, more than half of them are "now in default or foreclosed." That's a lot of stories bundled into one complex, failed financial product.

One of those homeowners was a 44-year-old heating and air-conditioning repairman who got into a motorcycle accident in 2006, was unable to find work, and couldn't afford his mortgage payments. He lost the house to foreclosure in October 2009 and plans to move out of his house by next week, reports the Journal. Other homeowners had risky loans with adjustable-rate mortgages, and when interest rates floated too high, borrowers couldn't afford the payments.

Hundreds of thousands of ordinary people in 48 states had their homes and mortgages bundled into this financial product. The Journal's work digs past the complexity of the CDO to show that those homeowners' financial hardship resulted in gain for savvy financial players like Paulson. Paulson, for its part, makes no apologies for its bets, or the fact that it made a profit while others lost their homes. From the Journal:

"There's no question we made money in these transactions," said a Paulson spokesman in a statement. "However, all our dealings were through arms-length transactions with experienced counterparties who had opposing views based on all available information at the time. We were straightforward in our dislike of these securities but the vast majority of people in the market thought we were dead wrong and openly and aggressively purchased the securities we were selling."

Goldman Sachs, which allowed Paulson to help select the CDO portfolio, maintains that it "did not structure a portfolio that was designed to lose money," and argues that it "lost more than $90 million" on this particular Abacus CDO.

"We wouldn't have put skin in the game that way if we believed there was something wrong with this transaction," said Goldman Sachs' general counsel, Gregory Palm, in a conference call with analysts earlier this week. But news reports point out that Goldman didn't intend to put its "skin in the game" on this deal. Instead, it had sought buyers in order to offload its stake in the investment almost from the start.