- Posted at 4:38, November 27, 2013
- By Russ Bleemer
A new article in the Nation magazine suggests that securitizing rent revenue will lead to the same disaster that came from the recession-inducing mortgage securitizations of the early to mid '00s.
The article, "How Wall Street Has Turned Housing Into a Dangerous Get-Rich-Quick Scheme—Again: This time it’s securities bundled from rentals, rather than mortgages," can be found here.
Blackstone Group is the culprit, or at least the potential culprit. The article says that the New York investment firm has been buying foreclosed homes to rent out. It says the company, through a sub, bought 1,400 homes in Atlanta in one day, and has spent $7.5 billion on mostly foreclosed homes nationwide. It's now the largest U.S. owner of single-family homes in the nation.
But that's not exactly the problem. The article says that it will sell off the revenue, score a profit, and then its institutional investors will benefit.
But that's not exactly the problem either. The problem is that the institutional investors--Morgan Stanley, Citigroup, Deutsche Bank, UBS, Bank of America, Goldman Sachs and, JPMorgan Chase--are "generally regarded as the main culprits in creating the conditions that led to the foreclosure crisis in the first place."
The article, by Laura Gottesdiener and reprinted from the Nation Institute's TomDispatch.com site, says, "Depending on whom you ask, the idea of bundling rental payments and selling them off to investors is either a natural evolution of the finance industry or a fire-breathing chimera."
There's little question which way the article comes down, but you should read it for yourself at the link above.