Wall Street’s wily front group: Inside story of a rental scheme’s secret facelift

[xchrom]

http://www.salon.com/2014/04/02/wall_streets_wily_front_group_inside_story_of_a_rental_schemes_secret_facelift/



The Wall Street rental scheme, the mass purchase of 200,000 single-family homes by hedge funds and private equity firms to convert to rental properties, has run into some trouble. Complaints from renters have proliferated, alleging that repairs go unaddressed, leases violate local tenant ordinances and unnecessary evictions often occur due to negligence. The plan to sell bonds backed by revenue from the rental properties has also stumbled. Collected rents on the initial rental-backed security from private equity giant Blackstone fell 7.6 percent from October 2013 to January 2014, suggesting that the homes aren’t being occupied at a level necessary to make the deal work. The Standard and Poor’s rating agency declined to offer a triple-A rating for the securities, and with fewer foreclosed properties to buy and higher home prices, many investors have cooled on the idea.

Nevertheless, the firms who already purchased the homes and put the scheme in motion have plowed ahead. Colony Capital, American Residential Properties and American Homes 4 Rent have all floated their own rental revenue bonds.

And now the major players in this space have done what every industry of questionable merit does in response to hardship – they created a trade group to lobby in Washington on their behalf.

The National Rental Home Council, unveiled last week, seeks to make Americans comfortable with their new Wall Street landlords. And the backers – Colony Capital, Blackstone subsidiary Invitation Homes, American Homes 4 Rent and Starwood Waypoint Residential Trust – hired some of the most skillful operators in Washington to aid them: a lobbying shop made up of veterans from the Clinton White House.

[MannyGoldstein]

1. Frankly, I think these unfortunate investors should be bailed out

It's not *their* fault that their would-be victims don't have enough money to be victimized.

Regards,

Always-lookin'-forward Manny

[xchrom]

3. !

[Blanks]

6. Well, duh - they're obviously job creators.

They should be rewarded for their effort.



I had my doubts that this scheme would work from the very beginning. There's more to being a landlord than just owning houses.

If it were easy everyone would do it.

[Jackpine Radical]

11. Yes, we need to bail them out AND

make sure there is enough money in the deal to assure a good round of bonuses to reward the execs for getting the bailouts.

[malaise]

2. Greed on steroids

is destroying America

[JustAnotherGen]

4. And having purchased a home in the north east

Last October - and searching for a year and a half - they are hurting 'real' home buyers with this scheme. The only reason we got into our house is because my realtor and I both found the listing within the first 5 minutes of it going up (it was in the NY Times as a featured listing) and placing an offer before we even stepped inside of the house.

The sons of the owner went with our lowball because they knew we were moving in to bring it back to life. Not flip it or cut it up into a few apartments to rent.

[justabob]

7. true

It is absolutely insane right now. I work in real estate and what you describe about finding listings and making offers within minutes of posting is the only way a lot of the time. We have several clients looking for both rentals and homes to purchase and they just aren't available, or not at prices regular people can/will pay. It is frustrating, and it is a terrible circle.... People don't want to sell their homes because they can't find one to move to, and they can't find one to move to because no one wants to sell. The addition of these vultures to the mix just makes it that much worse.

[djean111]

5. Yes, Blackstone/Bain asked to buy my home, bragging that it cut out first-time buyers and people who

needed mortgages. I think they own about 200 houses in my neighborhood, and were successfully beaten back last year when they tried to get the HOA to adopt an outside firm that would have increased our $30 a year HOA dues by, at the very LEAST - a factor of 10. That fee would be deductible for them, I believe, as a business. Our thirty year old development has no need of high-priced lawyers collecting fees for nothing. Plus the official state-sanctioned development overlords can levy assessments at will. I have seen new developments using the LACK of the state overseers as a reason for buying there.

We have our own little website, a nice little set of rules, and a deal with the county whereby deed restrictions and code violations can be reported to a little group that will come out and enforce code violations and discuss deed restrictions when necessary.
WTF are they lobbying for? Being seen as kindly or whatever? To what purpose? Or are they already lobbying for a bail-out or subsidies from the federal government due to that empty house problem? Do they want high-priced outside HOA managers forced on to developments?

Third Way and the GOP being in charge, I will assume they will get whatever they want.

[Lydia Leftcoast]

8. Ah-hah!

Now the foreclosure "crisis" makes sense. The banks want all those foreclosed homes so that they can use them as rental cash cows.

[mrdmk]

14. It worked for them somewhat in the commercial market

Lots of commercial properties went into foreclosure along with residential homes.

The commercial properties were actually producing a profit for the banks so there was no reason to sell. The difference was the commercial properties had people in place to collect rents, maintain the property, show to prospective clients and so-forth.

Residential properties are a completely different business. These business people had no idea what they were getting into and now are blowing it. It figures...

[fasttense]

9. Absentee landlords are just so wonderful

Pretty soon most American citizens will be nothing more than tenants and serfs.

[kmlisle]

10. Foreclosures a few years ago were going back to the banks for a hundred dollars a house

I attended a foreclosure auction in my home town in support of a woman being foreclosed on who had been cheated by BOA (Surprise, surprise!). A guy dressed in Bermuda shorts and a Realtor representing my friend were the only bidders on numerous houses. The guy in shorts was the bank rep and he got all the houses except one for 100$ each. I did not stay after our bid representing my friend, but that was at least a half dozen houses.

My friends house went for 100,000 dollars - still to the bank - but at least they bid it up to make them pay. Its was a shocking, eye opening experience for me!

[wandy]

12. Mitt Romney could have solved this back in 2011..............

Setting the tone here

Romney says foreclosures should "hit the bottom"

In an interview published Tuesday ahead of presidential debate, Romney told Las Vegas Review Journal's editorial board that solving the foreclosure crisis would require letting banks proceed against homeowners who have defaulted on their mortgages. New investors could then rent out the homes until markets adjusted.

http://www.boston.com/news/local/new_hampshire/articles/2011/10/18/romney_says_foreclosures_should_hit_the_bottom/
No, things may not be great.
No Obama may not have lived up to all expectations.

But, holey crap Batman did we dodge the bullet on this mittens thing!

[bvar22]

13. Sounds like they need a Bailout,

or better yet,
an ongoing 3rd Way "subsidy" from the Public Treasury to help out.