It always astounds me when these bankers/hedge fun managers think they’ve stumbled across another get rich quick scheme. Only one in a thousand ever turn out for the principle swindlers, and all of those use illegal means. Or, what should be illegal.

My question is always the same, where do they think all this money is going to come from? Are they planning on having people buy these homes from them by financing them through bank loans? Basically, a rehash of the mess that got everyone here in the first place. Do they assume they can make their money back from renters and by selling the houses later?

You pointed out that there is a major problem with these people being absentee slumlords. Who is going to buy a property worth less than the distressed amount they paid for it at auction? They might get one or two ‘flippers’ invested, but not to the tune of 15,000 homes. I could understand them making their money back, eventually, if they provided effective property management. That is never the case, though. The larger the buyout, the worse they are at asset management.

It boggles the mind.

A hundred years from now the thing this era will be remembered for is its utter lawlessness & lack of accountability. I sure wouldn’t want that to be my legacy.

Yes, but as far as a “legacy” is concerned, these criminals don’t care at all. In fact, they would laugh in your face at your “concern” over something as trifling & piddling as a “legacy.” Get RICH. The quicker the better, and better still if it means ROBBING from the poor.

Around where I live in Northern CA, the banks are holding onto a LOT of foreclosed properties – and have done so now for the past few years. This leads to feeding frenzies, esp at the bottom end where the sharks speculators gather.

There aren’t a ton of homes for rent, either, but there is a certain amount. Unsure where it will lead, as it is somewhat difficult finding a property to buy, unless you’re looking at the high end. Then there’s a boatload of expensive properties for sale… but not a ton of buyers.

This will be a legacy of anonymity just like the roaring 20s. Noone remembers now who specifically is too blame for the crash and noone can remember who specifically was living too large for their lifestyles. There are stories of nameless investors jumping out of buildings but that is about it.

There were heroes in the 30s who saved built up America, there are heroes in the 40s and the 1910s (wow thats ancient history now that i have to demarcate that with a 19) who saved the world.

There are not alot of house hold names from the 20s and I think all of the spinelessness of people today will be wiped away by stories yet to be told. The question is, ‘Who will write the stories of tomorrow?’

This is another Perfect Storm for the Rentier Class to lock in their profits at the expense of everyone else. These houses are renting for two plus times the amount of the mortgage payment if they were purchased insted of rented. The high rents guarantee that the renters will never be able to save the money to purchase these houses.

In Phoenix my brother has been repeatedly outbid by speculators and has given up trying to buy, their may even be collusion in the bidding process.

Get rich now, and use that money to hire journalists and historians to fashion your legacy.

Supposing that prospective renters either are former home owners who couldn’t afford their mortgages or people who have never been able to afford mortgages, who among them can afford to rent at two plus times the mortgages they already can’t afford? That doesn’t compute.

This reminds me of the good old days of the S&L crisis only difference some criminals went to jail back then and today they are rewarded.

Everything is on schedule, please move along.

Blackstone borrows the $$$ from the banks which in turn are getting it from BerBanke at giveaway rates. We had Greenspan’s housing bubble, now BerBanke wants one too. It’s only fair after all.

And who give a rat’s ass what could go wrong? In a pinch BerBanke will bail everyone (that counts) out with printed money.

the only people to do jail time today are the ones who robbed from the rich like Madoff and Stanford.

And I’m sure hedge funds would be responsible managers of those tens of thousands of houses they’re renting out.

Hotwater heater died? Call the hedge fund!

Roof leaking? Call the hedge fund!

Rats in the basement! Call the hedge fund!

Yeah, and I bet the hedge fund managers will be right out double quick in overalls with a wrench in hand.

This tallies with my theory: that recessions and depressions are served up on a regular basis so that the obscenely wealthy can buy up everything they don’t already own at garage sale prices.

I feel bad for all these investors when they find out people need their health and a job in order to afford to rent a house.

My daughters live in the same apartment complex in San Rafael (Marin county, CA). They each pay around $1800 a month for 2 bedroom 1 bath apartments. The apartments aren’t very nice. I wonder how high the rent will be pushed up in places like Marin county where rents are already terrible.

On the other side of the bay in Vallejo you can purchase a townhouse for $60,000 to $100,000. Or rather, you could six months ago. The speculators have arrived and these places are being sold in a day of hitting the market. I wonder where the poor people will end up when Vallejo becomes a bedroom community for San Francisco. Maybe they can all squeeze into Richmond, CA where Chevron has been poisoning the poor for almost a century.

I saw this coming five years ago.
I knew someone with lots of money was going to buy up a shit ton of foreclosed properties, I just figured it would be the likes of Goldman Sachs.
Loads and loads of real estate, cheap. Tear down the houses if they want, it’s the real estate they want.

Your daughters pay more in rent than my annual income. What jobs do they have? I’m always floored by that kind of rent. I stay in my broken down house because it’s so cheap. Of course, it needs all kinds of work, but the roof doesn’t leak and the mortgage is less than $200 a month. I’ve looked into renting around here, but even in a $800 something a month rental, I’d be over my head financially in no time. $1,800 a month!

One has her masters in nurse management and is an icu nurse and the other has her masters in acupuncture and integrative medicine and is on leave from having a babe. They both have partners so they split the rent. Marin County is just north of San Francisco. SF is the most expensive place to live now. Worse than NYC. My daughters have very modest life styles since mostly they pay rent.

X2. Not a whole lot matters when you’re dead.

But think of it: a new generation of American Dreamers will be able to graduate from junior college and live in a rented slum until their employers give their jobs to some guys in Bangladesh.

Who says Obama has not been a transformative figure?

I guess they use more of their income for rent at the expense of food or other necessities or they share. You either pay or you are homeless. The other possibility is that the home they lost was larger and they were paying very high mortgage payments.

Our government is promoting this. Matt Taibbi wrote about the scheme about six months ago.

http://www.rollingstone.com/politics/blogs/taibblog/another-hidden-bailout-helping-wall-street-collect-your-rent-20120319

This is a bonus to the banisters for well job well done.

Yes, the last thing we need to see will be the butt crack of a banker or fund manager hanging out of that overall. They, in collaboration with our corrupt government, have already told the general public something equivalent of “Kiss my ass.”

Apparently this business model has been quite successful in Phoenix. It’s led to a direct increase in rental income for the scavenger hedge funds with the corresponding negative impact on the 99%. It’s allowed the 1% to accumulate vast real estate holdings at discounted prices through economic warfare, much as they profit from the displacement of the 99% through natural disasters, like Katrina or the earthquake generated tsunami in Asia.

The difference here is that this was definately not a Natural Disaster.

Disaster Capitalism is the new normal, get used to it peons.

Thank you for keeping this story fresh, David. As I have mentioned often enough, I grew up in Los Alamos, NM, which is now known as one of the richest counties in the US with the highest per capita incomes in the country.

We are liquidating the family business there, and I have heard a lot of interesting information in the last week or so. The town has only two local banks and several credit unions, not including one in-store WF counter. I find this remarkable, in a rich town, not one bricks and mortar TBTF bank there. Regardless, the local bank was founded by local people who got average folks to invest in it back in the late 60s, I think. Little Momma became a stockholder, with an initial $1000 investment.

The stock is privately held, and it is hard to sell it for a variety of reasons but it is essentially worthless because it can’t sell, though the bank has more than a billion dollars in assets.

The feds have been all over the bank scouring their books for minor infractions and very high loan to value asset requirements, now imposed on all small banks. I think the feds want all of them out of business. It is very hard to borrow money from the local bank, even for rich people in Los Alamos, to expand a business, for example.

The impacts of TBTF banks across the board are incalculable. It is financial tyranny, and the collusion of the government with the banks is a crime that will never be punished, unless the house of cards falls on them and someone calls their bluff.

Even the richest county in the country is hampered by the current regime. Even people with these high incomes are the 99%.

That’s what I was describing in my comment. It’s been the policy ever since Reagan adopted the economic policies of Milton Friedman and his Chicago School of Economics. It’s the economically induced catastrophe that mirrors a natural disaster, an unnatural or man-made disaster.

My Free Marketeer brother in Atlanta started buying distressed houses last year before the Big Boys moved in. He picked up nice three bedroom houses for about 65k which he now rents for $950/month. He claims his ROI is 15% annually which is a huge return in our present economy.

This is called the Creative Destruction of the Market.

An interesting aside, when Herr Kissenger instaled General Pinochet into power in Chile they brought in Uncle Miltie and the Chicago Boys to fix their economy. After the Great Dictator saw the effects of their genius he expelled them from the country.

I doubt that anyonewho can’t afford a mortgage will pay that kind of rent on a poorly constructed McMansion. Those structures are literal shit, even at the high end. You’d be an idiot to buy anything built after 1980 unless you built it yourself.

It’s still a scam. They are getting a rental cash flow against which they charge depreciation on the house, interest (nominal) and phony expenses. If they can milk the property like this for ten years they will make money. I dobt they expect a capital gain. That’s just for suckers.

You’re right about the lack of quality in many of these houses but most people don’t have much choice the rental market is tight.

Since these investors are getting these houses at bargain basement prices, way below building costs and they are getting the financing cheap there is real profit to be made. The big operators are planning to securitize these deals skim their gains and leave the bondholders holding the bag when it falls apart.

I see that you are referencing the first 9/11 attack that was orchestrated in Chile in 1973 by the USA. I’ve read Naomi Klein, John Perkins, and
Eduardo Galeano so I’m quite familiar with the suppression of Latin America that is our legacy.