Wall Street Set to Cash in again by Buying Bulk Foreclosed Homes and Renting Them Out
Thursday, March 22, 2012
Having helped cripple the housing market, Wall Street firms are now seeking to profit from the millions of foreclosed homes by buying up properties and renting them out.
Fannie Mae is helping arrange the deal, by packaging large numbers of bank-owned homes and selling them in bulk. The plan comes at a risk for the American taxpayer, according to The Wall Street Journal:
“Bulk sales, however, pose a trade-off. While the current approach of selling homes one-by-one has its own high costs and is sometimes inefficient, selling properties in bulk to large investors could require Fannie Mae to sell at a big discount, leading to larger initial costs. It is unclear which would be least costly ultimately to taxpayers, who are responsible for the big mortgage-finance company’s losses.”
Firms considering the bulk sales include Amherst Securities Group, a fund run by mortgage-bond player Lewis Ranieri, hedge-fund manager Paulson & Co. and private-equity investors Colony Capital LLC.
The first sale would consist of 2,500 homes from across the country, with a total value of about $320 million. The banks and hedge funds buying the bulk properties from Fannie Mae would be required to rent the house and not sell them for seven years. Bids are due in about a month, with the winners announced in late May
To Learn More:
Wall Street Keys On Landlord Business (by Nick Timiraos, Robbie Whelan and Matt Phillips, Wall Street Journal)
Another Hidden Bailout: Helping Wall Street Collect Your Rent (by Matt Taibbi, Rolling Stone)
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