"The market for bonds backed by rental houses could ‘‘reach or exceed $30 billion’’ a year.... Low-volume deals with looser terms than government-backed mortgages [for] owners of the almost 14 million rental houses in the United States at a time when many Americans are struggling to get a mortgage and homeownership is declining. Cerberus and Blackstone, along with Colony Capital, also are racing to package debt on homes managed by separate landlords for the first multiborrower bond sale — has led Wall Street’s issuance of $3 billion of securities backed by properties.... expect to sell their first bond securitizations this year, which would free up funds and give them the opportunity to increase yields if they hold some of the riskier portions of the debt."
It's the MORTGAGE-BACKED SECURITIES FRAUD ALL OVER AGAIN -- after they FRAUDULENTLY FORECLOSED UPON and ILLEGALLY SEIZED HOUSES, turning more and more people into RENTERS -- with the likelihood of GREATER DEFAULTS!
At least the AmeriKan government will make the American people pay for it.
Related: Banks Love You
Good thing, too! Imagine if they hated you!
"Cerberus, Blackstone loosen credit to landlords" by Heather Perlberg and John Gittelsohn | Bloomberg News July 11, 2014
What the hell?
NEW YORK — US property owners with just one rental house can now get cash from Wall Street to buy more.
Oh, they are just passing it out over there?
Cerberus Capital Management, which initially targeted landlords with multimillion-dollar loans, is financing low-volume deals for small investors through its FirstKey Lending, with looser terms than for government-backed mortgages from Fannie Mae and Freddie Mac, said Randy Reiff, the business’s chief officer. Blackstone Group’s rental lending arm, B2R Finance, is making a similar push to mom-and-pop landlords.
‘‘Our premise has always been to be able to lend to the middle market and entrepreneurial borrowers in the space, not just the institutional borrowers,’’ Reiff said. ‘‘The biggest guys have always enjoyed access to capital. The largest part of this market is really the entrepreneurial owners.’’
The companies are competing to lend to owners of the almost 14 million rental houses in the United States at a time when many Americans are struggling to get a mortgage and homeownership is declining. Cerberus and Blackstone, along with Colony Capital, also are racing to package debt on homes managed by separate landlords for the first multiborrower bond sale.
Blackstone, the biggest US single-family landlord — it has amassed 45,000 houses since early 2012 — has led Wall Street’s issuance of $3 billion of securities backed by properties owned by one company. The New York firm’s B2R unit is expanding the rental bet with plans to offer funding to investors who need only one rental home to qualify, starting this year, said John Beacham, president of B2R.
About 53 percent of the 14 million US investor-owned or vacation houses were without a mortgage as of last month, based on data from the property-research firm RealtyTrac, implying investors in about 7 million homes could get cash-out mortgage financing to buy more real estate or make other investments. More than 1.3 million property owners in the rental market own at least two homes, according to Westminster, Colo.-based RentRange.
It is WHATEVER THEY HAVE TO DO to ENSLAVE YOU TO DEBT!
Then they will bundle them, have their bought-and-paid-for ratings firms misgrade them, bet against them, and make loads of cash on both sides. Remember?
B2R was among companies offering loans last month at a Dallas meeting of HomeVestors of America, which has 472 franchises for property investors in 120 cities, most of whom own fewer than 10 single-family homes, said copresident David Hicks. Small landlords have struggled to get financing until the last couple of years, and most offers came with high interest rates, said Hicks, whose company advertises on billboards that say ‘‘We buy ugly houses’’ with a picture of a cartoon caveman.
‘‘Now they have a choice of who to borrow from,’’ he said. ‘‘It’s like night and day.’’
Some choice. Bank devils or private equity demons. A true devil'$ choice.
The Wall Street firms offer loans with interest rates of 6.5 to 7 percent, compared with 12 to 15 percent for nonbank hard-money loans, the most common source of debt for landlords who can’t get a bank mortgage, Hicks said. The deals can come with strings, such as such as requiring an analysis of the cash flow from rents.
Rental demand is climbing as tight credit, slow wage growth, and the lingering effects of the foreclosure crisis limit purchases.
And yet I have been told by my propaganda pre$$ a healthy housing recovery is driving the recovery that is only benefiting the 1%.
The US homeownership rate dropped to a 19-year low of 64.8 percent in the first quarter, down from a high of 69.2 percent in 2004, according to the Census Bureau.
Stagnating wages and an increase in student debt are keeping younger people from qualifying or even wanting to buy, said Laurie Goodman, director of the Housing Finance Policy Center at the Urban Institute in Washington. ‘‘They don’t see it as a store of value,’’ she said.
For lenders, that’s an opportunity to expand credit to rental property owners, including those who wouldn’t qualify for government-backed loans or have outgrown the parameters.
But remember, the whole tone of this article is how private equity and Wall Street is helping you, the small landlord renting out a floor.
Shifting the focus to property owners with fewer houses is ‘‘just an expansion of our efforts to service the entire scope of the single-family market,’’ Reiff said.
Yup. That's why the world is such great shape. Banks have gotten phat; what more do you need to be happy?
******************
All three finance companies said they expect to sell their first bonds this year, which would free up funds and give them the opportunity to increase yields if they hold some of the riskier portions of the debt.
‘‘There’s still a lot of wood to chop,’’ said Nitin Bhasin, a managing director at Kroll Bond Rating Agency. ‘‘The firms are still originating loans and when they get to a critical mass and can iron out issues, we’ll see them. My guess is late this year we’ll see the first securitizations.’’
Securities backed by single-family rental homes with multiple borrowers have different risks than securities with a single borrower, according to Moody’s Investors Service.
‘‘Loans in multiborrower SFRs will be more likely to default than loans in single-borrower transactions because of the larger number of borrowers represented in the pool,’’ Kruti Muni, Todd Swanson, and Sang Shin wrote in a May 14 note. ‘‘But the rate of default will not be 100 percent, as is the case when the lone borrower in a single-borrower transaction defaults.’’
Meaning the losses get spread around to everybody?
The market for bonds backed by rental houses could ‘‘reach or exceed $30 billion’’ a year, according to a January report by a Keefe, Bruyette & Woods Inc. analyst, Jade Rahmani.
The size of the market could be limited to $20 billion total, Urban Institute’s Goodman estimates, because it still costs more for many small landlords to borrow from Wall Street than from banks, the main source of funding before the real estate collapse.
If banks increase lending again, companies like Cerberus and Blackstone will be forced to reduce the spread between what they charge borrowers and the cost of the debt in their securitizations, she said.
That doesn't $ound good.
Sam Khater, deputy chief economist for CoreLogic Inc., expects more Americans to become renters as many younger people who deferred forming households and lived with their parents start leasing homes in a recovering economy.
Yes, we will ALL BE RENTING from our LORDS and MA$TERS like in the FEUDALISTIC TIMES of SERFDOM that have now become 21st-century FA$CI$M in its TRUE$T FORM!!
“Rents are holding up fairly well,’’ he said. ‘‘The demand is there, and it’s still rising.’
Home ownership is at a 19-year low.
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