Thursday, May 21, 2015

As I Predicted In 2009, Wall St. Investors Amassing Ridiculous Amounts Of Foreclosed Real Estate

I saw this coming not long after the Housing Bubble started to pop and then the Recession hit . I'm actually surprised it took those scumbag investors this long.

All those foreclosed houses didn't just disappear.

It's not just that they have been collecting scads of houses on the cheap though, now they are actively buying houses, so they can rent them out.

Wall Street’s Hot New Financial Product: Your Rent Check


Source: Mother Jones

Over the last two years, private equity firms and hedge funds have amassed an unprecedented real estate empire, snapping up Spanish revivals in Phoenix, adobes in Los Angeles, Queen Anne Victorians in Atlanta, and brick-faced bungalows in Chicago. In total, Wall Street investors have bought more than 200,000 cheap, mostly foreclosed houses in some of the cities hardest hit by the economic meltdown. But they’re not simply flipping these houses. Instead, they’ve started bundling some of them into a new kind of financial product that could blow up the housing market all over again.

No company has bought more houses than the Blackstone Group, one of the world’s largest private equity firms. (Its many investments include Hilton Hotels, the Weather Channel, and SeaWorld. Among its institutional investors are Goldman Sachs, Morgan Stanley, Citigroup, Bank of America, Deutsche Bank, and JPMorgan Chase.) Through its subsidiary, Invitation Homes, Blackstone has picked up houses through local brokers, at foreclosure auctions, and in bulk purchases. Last April, it bought 1,400 houses in Atlanta in a single day. In Phoenix, some neighborhoods have a Blackstone-owned home on just about every block. As of November, Blackstone had acquired 40,000 houses, most of them foreclosures, worth $7.5 billion. Today, it is the largest owner of single-family rental homes in the nation. 

In case this hasn't quite sunk in, let me explain a little something here.

The Housing Bubble was created because the government told the lenders to loosen up the requirements  to buying a house.
They did so and then some.
Pretty soon everyone and their dog was suddenly qualified to buy a house they couldn't possibly afford,
Fraud was absolutely rampant on the parts of the Banking industry to the point some had hired people just to sign off on the loans without even reading them.

All those rotten to the core mortgages got bundled up and sold world wide to investors.
Retirement funds, governments, all kinds of people bought these worthless instruments that were advertised as Grade A by the banking industry.
This caused the world wide financial melt down that we are still in the middle of and bankrupted several countries in the process.

Pretty soon reality hit and all those people who had bough houses they couldn't afford got foreclosed on. I'll give you one guess who was buying those mortgages.

Remember now, the Bankers made out like bandits on all this and only a small handful of people were ever prosecuted and went to jail over it.

Now those same people have killed the world economy, been caught red handed fixing the price of interest rates used by other banks  and investors. (LIBOR anyone?) They are now buying real estate to the tune of billions of dollars and are going to be your fucking landlords.
Because no one can afford to buy a house anymore, rentals have gotten scarce and the rents have skyrocketed.

If you followed all that then you will see that the thieving bastards made money at the beginning of this nightmare and  are going to continue to make money off of that scam well into the future, most likely until the world economy shuts down completely.

Every single moment of while this has been going on, our government has repeatedly refused to prosecute any of these financial institutions, Too Big To Fail ring a bell?
Then when the truth came out and the entire world had been had by these people they gently slapped their wrists for the symbolic visual of it and then sat back and watched it happen some more. In some cases, our government has actually enabled the whole scam.
It has sat by and watched the largest transfer of wealth in the history of man and not only has done nothing to stop it, it has had a revolving door policy letting the people responsible for it come and go between the financial institutions it is supposed to be overseeing and cushy insider government jobs in the very agencies charged with the oversight.

We are fucked six ways from Sunday and there is absolutely nothing we can do about it.



Anonymous said...

No big surprise there - the bankers win yet again. Back in the 1970's (I think - I was a 'yout' back then, lol), Earl Butz told U.S. farmers to 'Get Big Or Get Out'. Buy EXPENSIVE farm machinery to farm more land and make more profits. Get a loan and become rich!

But farming isn't always a success (always a weather crisis or other snafu) and the folks who bought in big and didn't have deep pockets were foreclosed on. The bank being handed the keys, of course.

If it ever comes down to SHTF, I expect a lot of lawyers, bankers, crooked law enforcement folks and others who take advantage of people will find themselves at the end of a rope, swinging in the air. A lot of folks who are alive are only so because killing them is again' the rules. Have a piece of advice for them from an old Who song - PUT ON MY LEAD BOOTS AND TAKE A LONG LONG DRIVE !

BadTux said...

We are fucked six ways from Sunday and there is absolutely nothing we can do about it.

I wish I could disagree. But I can't. I've been watching the same dynamic play out, except that in some markets they don't even bother renting out the real estate they're collecting -- they just leave it vacant for a year or two to drive up rents and prices on other real estate in the market, then dump it at massive appreciation. Having renters in the condo or house would mean possible damage to the condo or house, and problems evicting them when the condo or house is sold, so it's estimated at as much as 30% of the residential properties in high-cost cities like San Francisco and New York City are vacant -- deliberately.

SiGraybeard said...

You're absolutely right, of course.

Let me point out that the Federal Reserve acts as the enablers here by creating trillions of dollars out of thin air and giving it to the Too Big to Fail banks. The Fed wanted to create inflation in house prices to make mortgages look better in their numbers games. If a mortgage was for $200,000 and the house was really worth half that, they had to double the price of the house to make their little games work out. In a lot of markets, the Fed has managed to do this.

None of it's real money or real value. It's just manipulating numbers.

Anonymous said...

Here is a very good description of what happened with the mortgage crisis. It's intended to be funny, but I'm not laughing.


Anonymous said...

Here is a very good description of what happened with the mortgage crisis. It's intended to be funny, but I'm not laughing.


Anonymous said...

So what of the small investor? I have six rent houses. Does that make me EVIL or just smart? Or maybe you are just a jealous converter of my ox and ass. The stock market is no longer user friendly for the common man as the big banks use computers that make 100s of transactions per second. Rental houses have been used since the time of Ben Franklin to pay for retirement. Careful what you wish for. The same folks whining now are the same group of suspects that whined about evil banks being to tight with their money. So Comrade Obama can to the rescue and provided ObamaLoans. Now the US taxpayer is fucked six ways from Sunday paying for defaults.

BadTux said...

The Fed wanted to prevent massive deflation that would have been caused by the big banks failing, deflation that would have caused every mortgage holder in America to default and lose their home. I can't fault them for that. The problem is that, as the Fed kept patiently explaining to Congress over and over again, that money had to be taken *out* of the economy via higher taxes on the rick and corporations or it would cause asset price inflation -- i.e., bubbles. But Congress preferred printing money ("selling Treasury bonds", same thing) rather than raise taxes and start paying down the deficit (which un-prints money). Because we cannot inconvenience our cold-blooded sociopathic lizard people overlords with little things like "taxes", those are for peons, not for our overlords.

Yeah, we are so fucked.

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