Government Buckles, Guarantees Buy-to-Rent Mortgage-Backed Securities for First Time Ever. Wall Street Wins Again.
Invitation Homes, the 2012 buy-to-rent creature of private-equity firm Blackstone, and now owner of 48,431 single-family homes, thus the largest landlord of single-family homes in the US, accomplished another feat: it obtained government guarantees for $1 billion in rental-home mortgage backed securities.
The disclosure came in an amended S-11 filing with the SEC on Monday in preparation for Invitation Homes’ IPO. Invitation Homes bought these properties out of foreclosure and turned them into rental properties, concentrated in 12 urban areas. The IPO filing lists $9.7 billion in single-family properties and $7.7 billion in debt.
Some of this debt will be refinanced with the proceeds from the sale of the $1 billion of government-guaranteed rental-home mortgage backed securities.
The government agency that has agreed to guarantee the “timely payment of principal and interest” of these “Guaranteed Certificates,” as they’re called, is Fannie Mae, one of the government-sponsored entities (GSE) that has been bailed out and taken over by the government during the Financial Crisis.
This is the first time ever that a government-sponsored enterprise has guaranteed single-family rental-home mortgage-backed securities, issued by a huge corporate landlord. It’s an essential step forward in financializing rents: taxpayer backing for funding the biggest landlords.
Government guarantees allow the mega-landlord to sell these securities at a lower yield and thus offer landlords like Blackstone’s entity even cheaper financing for future home purchases, and thus lower costs and greater profit potential.
During the next severe economic downturn, Fannie Mae and its sister Freddie Mac would need between $49 billion and $126 billion in taxpayer bailout money, according to the stress test conducted by the Federal Housing Finance Agency. The results were released in August last year. So why fret about one more billion?
Blackstone is the trailblazer in financializing rents. It pioneered the post-Financial Crisis buy-to-rent scheme, explicitly encouraged at the time by Fed Chairman Ben Bernanke and the Department of the Treasury, as they were trying to bail out the banks by finding willing and able buyers for foreclosed homes – big institutional buyers that could feed at the nearly-free money-trough the Fed had put out there.
And Blackstone was a trailblazer in the next logical step: issuing the first rent-backed structured securities in November 2013. The deal was collateralized by rental income from 3,207 homes. Moody’s, Kroll, and Morningstar – all paid by Blackstone – rated nearly 60% of the securities AAA. The remaining tranches carried lower ratings. The deal flew off the shelf. Now all larger buy-to-rent companies are using rent-backed structured securities for funding.
This too is going to happen with government guarantees on rental-home mortgage-backed securities. It’s a sweet deal for the issuer: low-cost funding, made possible by government guarantees, is always welcome. Other corporate landlords will follow in Blackstone’s footsteps.
Not all of it will be guaranteed by the government: To satisfy “credit risk retention requirements,” Invitation Homes “would purchase and retain the Subordinate Non-Guaranteed Certificates,” amounting to 5%, or $50 million, of the $1 billion in securities. That’s all the cushion the taxpayer has before losses begin to hit home, so to speak.
The GSEs were founded to promote homeownership by subsidizing it with at first implicit, and since the Financial Crisis explicit, government guaranteed mortgages. But this deal represents a big shift: now, in a delicious Wall-Street irony, the government subsidizes the largest landlords and enhances their profits from renting out single-family homes that individual homeowners had lost during the housing collapse and foreclosure crisis.
There is a darker side to corporate ownership of single-family rental homes and the financialization of rents: soaring evictions, according to the Atlanta Fed, which explicitly blames the Fed and Bernanke. Read… Evictions by Wall-Street Mega-Landlords Soar, Financialization of Rents Cause “Housing Instability”: Atlanta Fed
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Oh, if only I could get on that ever-expanding TBTF list!!
The obama landmines will go off over and over again in the next eight years…
Nice work with the blame game, 2banana. I guess it hasn’t sunk in for you that big money wins with both political parties.
Both wings of the same bird of prey.
Agree with Joe there’s little difference
2banana: What’s Trump and his GOP buddies going to do about this? Are they going to nix it? Obama isn’t President anymore.
What has been done by presidential ukase can be undone by presidential ukase.
IMNSHO, Congress should enact legislation mirroring that of other countries, where presidential edicts have long been the norm, whereby the presidential ukase must be submitted to the legislature, which can reject it by simple majority vote, within 30 days.
President Trump would be well advised to suspend *ALL* previous presidential orders, to be reviewed and reinstated as required, and create a data base, accessible by the public, of all reinstated/valid decrees with date of issue, with only those decrees in the database valid. As it now stands, only a very few people (most likely no one) know in total what has been decreed and how much taxpayer money is/was involved.
Maybe a political statement from the incoming treasury secretary? He is not on the job, but they know how his mind works.
Thank you for reporting it like it is Wolf.
“It’s an essential step forward in financializing rents: taxpayer backing for funding the biggest landlords.”
OK, am I in the minority thinking that this should not be Uncle Sam’s job? Why the hell should the US government give low cost capital to Blackstone in order to skew the housing market away from its citizens; who pay taxes in the first place?
Time for an executive order, Mr. Trump?
Don’t hold your breath.
Hahaha! Sometimes these articles can be depressing, so a little humor always does the trick.
Stephen Schwarzman chief executive officer of Blackstone Group LP and a Trump adviser.
For those of us who saw this level of cronyism coming.
This whole situation is quiet boring, there will be 4 to 8 more years of it.
The P 45 Administration, could quiet easily turn out to be the most corrupt in American history.
America has defiantly elected what it deserves this time.
interesting, they sell foreclosed homes to these guys, loan them the dough, and then help them ipo.
invitation homes, indeed.
not buying the ipo, nope.
“Why the hell should the US government give low cost capital to Blackstone in order to skew the housing market away from its citizens; ”
Agree that the government should not be doing this, but then governments are doing pretty much the same everywhere in the economy: providing almost free loans to big business through NIRP/ZIRP and QE, with the result that big business makes more profit and their smaller competitors get eliminated (driving up prices for consumers). And also, with the taxpayer effectively footing the bill if the bubble bursts (still to come for all those nearly-free corporate loans …)
Time for savers to take their money out of the banks.
for most savers withdrawing their money from the banks means ‘investing’ their savings in stocks or RE – which adds to the effects of direct central bank buying, exactly as they planned.
There really are no safe places left for ones savings, even more so with inflation rising and paper money on the way to the exit.
RE: Time for savers to take their money out of the banks.
Learn from the demonetization debacle in India and make sure it is in small bills.
Because that’s what they do when they have been infiltrated by the bulldogs on the prowl.
Dan you are not alone. Unfortunately we are just a minority.
Peter G. Peterson, co-founder of Blackstone is the same person whose Peter G. Peterson Foundation promotes the efforts of the late Bowles-Simpson Commission for deficit-reduction. He is involved in the corporate-funded “Fix the Debt” campaign of CEOs lobbying for an austerity grand bargain which would effectively gut social programs.
How ironic. These guys only want to gut social programs for everyone else.
Privatize the profit and socialize the risk. Capitalism for the rest of us.
Ed – Very true.
What a sweet Wall Street boozle.
First, blow a huge home mortgage bubble, with a crash.
Next, foreclose and take the homes.
Now, rent out homes to former owners.
Take mortgages, package them in bundles and sell.
Lastly, make the taxpayer liable for any loss.
Just whistle while you work… la-tah-de- la-lah-la…
As a side note; Bank executives (inside sellers) have disposed of over $100 million worth of bank stock and options since the election. Goldman Sachs leading the charge out the exit door!
Just whistle while you… “Business” as usual.
This is NOT capitalism. It”s fascism.
This is scaring the hell out of me. The natural result, when the dust settles, is Revolution. Not a Bernie version, but an angry mob.
How is this not stealthy/silent Fascism? The Govt is continuing to hand everything to inside investors and Wall St.
a governmental system led by a dictator having complete power, forcibly suppressing opposition and criticism, regimenting all industry, commerce, etc., and emphasizing an aggressive nationalism and often racism.
For a guy who says he doesn’t like to lose when it comes to deal making, Trump really got spanked here. Or rather, the American taxpayer got spanked. I think this is merely the first of many lessons Trump will learn about the way Washington works.
I wondered how long it would be before someone blamed Trump for this and not give Obama the credit he is due!
One of Trump’s closest advisers is a mega landlord, Starwood Colony. I could see this one coming but if it isn’t countered with renter protections, it will give the left a wide avenue for protests. If Obama set up Trump, this was a good way to do it.
Exactly. This is just the kind of thing Trump said he was against. It would be nice if he would take some time off and come out with a coherent plan to reverse this and other handouts to Wall Street. Finance and politics are far too interwoven at the moment, and the best thing he could do for American workers would be to shackle the financial industry that consistently sell them out.
Funny how Trump gets the blame when it was the Federal Reserve under Obama’s administration that suggested that private equity get involved in buying distressed properties at bulk from the banks (See link below, Page 5). This combined with the Mortgage Settlement Agreement between Obama’s DOJ and the 5 largest lenders gave the green light to these type of practices
Not funny how Trump gets the blame. It’s his job to get the blame now. Has been for a few days. Also would be his job to get the kudos were he to fix this up.
It’s something to keep in mind. If Trump brings back good, well-paid jobs, problem two will be to keep these financial giant robots from taking the people, with their little amounts of new earned money of their own, and squashing them like bugs.
Old news! They were doung this in Georgia in the late 90s! What a bunch of crooks!
Smells like TARP Part Deux
I’m very much against corporates being heavily involved in the housing market to control people’s lives
This is absolutely insane. It’s even more craven than all the TARP / HAMP nonsense. At least those carried a fig leaf of trying to protect Main Street. This is nothing but a theft from the treasury.
Blackrock and the mortgage market isn’t even in trouble. This isn’t a bailout. It’s graft, pure and simple. Unbelievable.
I will forgive Trump many of his upcoming sins if he vetoes this or uses his twitter account to scuttle this. Unfortunately I’m not holding my breath…
Wolf, do you feel ike starting a petition on this topic at
what could go wrong ?
Yes, thanks for your reporting. Without being in the financial sector or neck deep in the DC insider circles, it is impossible to get inside information to understand how our country really works. Thank you so much.
One of the reasons why I kept coming back here, you won’t hear news like this elsewhere. Let’s enjoy it while it lasts because the “interesting party” will always find their way here and poison our minds.
While having large investors like Blackstone bulk purchase foreclosed homes may have been a useful way to ‘clear the market’ as the housing collapsed now it maybe frustrating efforts for first time buyers to enter the housing market.
These large operators can make cash offers on homes and, with access to cheaper financing, out bid individuals seeking to buy a house. How is this consistant with Federal housing policy?
This is disheartening to read. What is more worrying is the thought that the Fed could do what Japan is doing and go in and buy stocks to prop up the market. Does anyone else think that we are headed in that direction ?
You”re about 40 yrs late on this concern.
I smell a Women’s Protest over this one. LOL at the hypocrisy. Political correctness TRUMPS over doing the right thing.
And people wonder why the country is in the dumpster.
My thesis remains the same: this country has always deserved its fate.
The left could have moved to regulate these mega landlords as utilities at any time, but didn’t. The left doesn’t care about renters, the poor, or working Americans, it cares about the donors.
Housing, like telephony, energy, and water is a basic utility. They could have regulated it if they wanted to.
“The left could have moved to regulate these mega landlords as utilities at any time, but didn’t.”
Not true. The left has zero representation in the U.S. government. If any was there corporatists would get rid of it ASAP.
Even Bernie Sanders is the go-to guy for the trillion-dollar F-35 corporate giveaway. And Obama was a bigger neocon than Dubya. It is impossible to be elected to national office in the U.S. without corporate backing. Show otherwise. You can’t.
Trump and even Bernie got further than the person who raised and spent 1.5B.
The left sold out to the money a long time ago. I woke up to it when Bill Clinton was president. NAFTA was so disgusting that even billionaire Perrot was disgusted by it.
Petunia, I suggest you do some reading up on history and political economy before you call the contemporary Democratic Party the “Left.”
In fact, it’s just the Identitarian politics/Center wing of the moving-Right-for-decades Money Party.
It is what passes itself off as the left. Now that they have been disavowed they are distancing themselves from the reality.
I hope this comment wasn’t sooo radical that it deserves moderation. BTW, congratulations on not being banned by Google?
Nothing to do with “radical.” I just want to keep the political squabbling, name-calling, and flame-throwing out of this comment section. So I put in a few speed bumps, so to speak :-]
Which explains Pelosi’s remaining in place.
She was touted as the best fund raiser in the Democratic party.
And thus…nothing else matters, including the future of that party.
i am incredulous ! great reporting WR . A reasonable and prudent person would think this type of transaction would have been disallowed by the 1000 page DODD-FRANK ACT. But on the other hand since fannie and freddie are the only mortgage game in town post 2008 aren’t the taxpayers still on the hook for the the billions of subsequent MBS issuances ? Helicopter BEN jumped the gun by implementing/endorsing PE to purchase foreclosures en mass and created another moral hazard. The market would have stabilized/restructured without this endeavor.
Very good points. The root of the housing bubble whether in the US or elsewhere is the government sponsored enterprises which are also involved in this transaction. Privatize them and the bubble would never happen because the responsibility would be with the local bank manager. The other plank is, of course, the TBTF banks.
Agree, although I don’t think it is THE root of the housing bubble it certainly is a major one.
One of the problems is that these government institutions give artificially cheap money to ‘disadvantaged’ or ‘favored’ players, whether it is subprime buyers that are necessary for voting, or e.g. corporate landlords than can provide a lot of extra campaign money for government officials. This policy distorts the market and blows bubbles (favoring housing to the disadvantage of other economically more sensible activities). Favoring one group or company over another is bound to lead to more problems down the road (and even more favors usually, to ‘compensate’ others who are now ‘disadvantaged’)
Nauseating. This is like a disease now. The pigs are at the trough and to get rid of them will be impossible. Drain the swamp, sure. I’m sure the “right” people got paid.
NOTHING is impossible Blondey People just need to get desperate enough Look at history for the final outcome Lots of examples of where this will end
The difficulty is that all the ‘right people’ have already gotten out with the goods, and have received all the “little people’s” money…they just don’t know it yet, and won’t for years!
And this enables all the people who are first in first out to shake the dust from their feet, and claim righteousness when all of this crashes in the end.
As a little person, I resent this, but see no way to stop it. Until it all fails, and we rise from the rubble there will be no ‘righteous’ action, and without laws that enforce honesty from beginning to end… honesty about the expected effect, and even the unexpected ones…it will happen again.
The kleptocracy is becoming even more entrenched.
What can I say, other than saying I, as a tax payer and a shelter buyer, have to pay high rent and if I fail to pay high rent, which causes my land lord trouble, I will have to pay high tax to rescue my landlord. The only difference between me and my landlord is that my landlord can borrow at no cost and take ownership and competes me out of ownership.
If this is not rape, i do not know what is.
FU wall street and washington and one day you will feel the wrath of the people. Until that day, keep raping.
in Netherlands in addition to this rape, all the costs of a homeowner are fully tax deductible (which effectively halves the mortgage cost) while renters can deduct nothing. Dutch landlords officially cannot deduct interest from tax either, with the effect that rents are usually at least 2x as high as buying a similar home and that there are very few corporate landlords.
We don’t have Blackstone in Netherlands (AFAIK) but our housing corporations – until one generation ago government entities with beneficial objectives – now act mostly like they are Blackstone, including the lifestyle for their managers (often former Labour party politicians). When things go wrong there the renters or the taxpayers also get the bill.
This is thievery on an unprecedented scale and knowing what these guys are capable of, that’s saying something. I have a couple of questions, right off the bat. What needs to happen to trigger a default? A tenant moves out and they can’t re-rent the house. A hurricane, tornado, or flood hits and the tenant is forced to leave. This is going to get interesting on many levels and the voters are not in the mood to put up with it anymore.
I hope you’re right but I have my doubts People are still relatively happy with their parents basements and their phones When the parents money runs out then you will see real problems John B Wells did a great video on what really happened in Libya on another note
yeah, Petunia… my head is also REELING.
the sheer audacity is awesome…no…there are no WORDS.
but i agree with you, Frederick. and yesterday i was too depressed and sad to leave the house without sobbing into tears. we’re toast because people are spineless and chickenshit EVERYWHERE now. especially at home. that’s why i cease to believe in any revolt of any real kind, because people can’t even talk to each other and be embarrassed or hash out arguments now.
With the really rich having access to cheap capital and access to special privileges and rules, don’t be surprised to see the DOW at 25 000, SP 2500 and oil price going up. All these tricks are propping all kinds of asset such as housing, commodities prices (oil) and the stock market. The rich seems to prefer to play financial games instead of creating something like it was done during Henry Ford area.
I would not be surprised to see the stock market hyperinflate with the price of oil too. This could create more social tension and more social decay like we see in Mexico.
I read yesterday that nearly all central banks are planning to buy a lot more stocks this year. Even without free money for the elites and big corporations, just the central bank buying could be enough for DOW 25K. Fundamentals went out of the window long ago.
Financializing housing fits with this idea, it would detach home prices even further from reality just like with stock prices, interest rates and many other financial benchmarks. The insiders fill their pockets on the way up, the public gets the bill when things go wrong; rinse and repeat …
Wall Street crooks hardly try to hide their actions anymore. “Mortgage backed securities” is now call “Rent backed securities” and “Student backed securities”, etc.
And they know all these are gonna blow up soon, and need someone to hold the bag for them. Who better than the stupid tax payers?
Who knows? Who cares? Why bother?
You’re not going to do anything about it, so get used to it. Get used to wearing leeches on your pocketbooks and your souls 24/7.
Maybe someday you Yanks will learn not to take everything for granted, and maybe figure out when you’re getting lied to.
I woke up Walter and moved to Turkey to live debt free with my Turkish wife The weather is better than NY too
This news just sucks, Pottersvilles is what we are creating here in America. Please wake me up from nightmare, I thought the angel got his wings!
That was just another banker getting bailed out. Every time a bell rings, a TBTF gets bailed out.
Good one train :)
I can see the following scenario. Wall Street landlords will see a lot of cheap capital to buy more homes and expand their empire.
Why will they get a lot of money is because the investors will see the bonds as risk free which they are.
So now these Wall Street landlords buy a lot of houses and cause prices to rise while trying to outbid each other. Do they care they are overpaying and rent does not cover expenses…..no….because it is not their money. It is the bond holders money.
Soon the rent income cannot cover expenses because of high prices. Another reason could be a recession and the renters quick paying. The investors who bought bonds are not worried as the bonds are guaranteed. Now government buys these bad bonds and now become home owners. Guess who ends up buying these homes for 50 cents on the dollars…..the Wall Street landlords again. Wash…rinses…and repeat.
Until the leeches drain the hosts dry Then what? Move on to a new host I suppose
the elites must be happy that Elon Musk is trying to get off the planet and hoping to find new worlds to rip off …
Scam and skim, make up cockamamie stories. For instance, the analyst downgrades issued for ATI just prior to the earnings beat.
Sooner or later the problem gets similar to the trouble with the Dutch NHG ‘free put option’ for home buyers: ultimately the free puts are guaranteed by much of the same people who will get in trouble when the Ponzi fails.
Probably the Big Money has government guarantees that they get their money whatever happens, but you can’t draw blood from a stone. If they bleed all their customers dry, who is going to rent in these expensive houses? All one big Ponzi at least when these mega landlords get sufficiently big to move the market. Of course, as long as the market believes in this arrangement Blackstone and others can pocket a lot of money, but in the long run I think this cannot work.
Blackstone stock is much higher now than last time it was mentioned here.
Yes, that Invitation Homes IPO is going to be good for Blackstone. It might not sell a lot or any shares initially, but the shares will be valued at market, and it will eventually unload them in big waves down the line.
P45 is already getting the blame for this one, yet it was cooked up by P44.
Hard to know which one will ultimately turn out to be the biggest POS 20 years from now.
How many more hand grenades has P 44 left under the rug for P45.
Hard to think objectively, this is all coincidental.
I think it’s part of the job to get blamed for things you didn’t have anything to do with. Happens to all of them :-)
“I think it’s part of the job to get blamed for things you didn’t have anything to do with. Happens to all of them :-)”
very true, Just as they get the credit for the other guy’s good Economic work instead of him ( if he did any). But it is begging to look like 44 left some very nasty surprises, that step outsid the usual norm’s.
44 did a lot of, I will do what I want, not what is good for all of America and the world, as I don’t have to get elected again.
In his last years and month’s.
Some of the backlashes to that, will involve many body bag’s.
The main beneficiary of his TPP failure will be china, at the expense of American workers, for starters.
America needs customers, p45 just told 40% of the world Economy, to go take a hike.
Made in USA, just became like made in china, only when their are no other option’s.
Right, Social Justice indeed.
It is hard to be blamed for things you did not have a clue about.
Guess who sits on Fannies bod….several former Blackstone executives. Put there by FHFA after the illegal conservator ship.
oh my god, Wolf…. you are the ONLY one always on top of this stuff. please pretty pleeeease watch your back, my Brother.
Good to hear from you again, kitten!
You been away awhile …
aw shucks, thanks for even noticing me, RD!
i’ve been quietly reading, skimming comments, but i’m having a really difficult time with the death of the secret love of my motherfuckin LIFE, as well as the death of of my mission block, the whole neighborhood, my town, and any decency or common sense ANYWHERE. and americans who travel know we’ve already been considered a Nation of Assholes, but now… it’s just so cynical and blatant and mean and i never thought things could POSSIBLY get so BAD when no one’s having a blast…
so yeah. the parade of shitty news and all the rains here have been pummeling me and my spirit and optimism into the ground like a piling.
i’m struggling hard to re-emerge and believe in ANYTHING good or positive because i also laugh at the women’s march like it’s BEAUTIFUL but everything’s only SYMBOLIC now. it’s a full time JOB to truly fight anything but now we’re all indentured servants, company store, everything good like unions and solidarity is a joke.
i worked out yesterday for 3-4 hours, dancing in the sun and lifting such heavy weights i popped “something.” but it’s a welcome soreness because i feel focused down, alive, and human and prepared to fight another day.
best of luck to you. i feel everyone’s pain all the sudden. i see it in eyes i can’t even SEE. like on here. we’re all deer in headlights saying “WHAT THE FUCK?”
that pogo quote that says something like: “we have met the enemy and he is us,” used to horrify me. but now that i’m almost fifty, it seems obvious and even comforting, because now i finally have the WORDS to underline enunciate and realize the biggest horror void scream that’s way more BASIC than who’re “enemies/allies” and goes beyond my fear of the vastness of the universe:
THERE ARE NO ADULTS IN CHARGE ANYWHERE ANYMORE.
not so glad to hear from me, after all, eh, RD? (smile) but i’m trying trying TRYING to find the “god” in all this… somewhere… somehow…
Someone is in charge, finally. You just forgot what it was like. Cheer up and consider moving. Out here in flyover country SF scares the hell out of us.
“Cheer up and consider moving. Out here in flyover country SF scares the hell out of us.”
that made me SMILE. …yeah, Petunia…that’s ALSO what’s got me so damn blue: i’m finally tapping out on hanging on during this san francisco death thing and told James we’ve gotta get outta here. i feel like we’re hanging on in a flushing toilet with thousands of people also looking for something to hold onto in this beautiful porcelain bowl with a view.
what sucks is that things don’t just quietly die or end; people actually go insane. i’ve seen sooooo many people actually snap slowly or quickly before my very eyes…and disappear.
..but Petunia…there’s also nowhere really to go… as per this very post we’re commenting on, yeah? it’s like you can’t possibly outrun the Nothing that’s taking over the world. that’s what’s making me hyperventilate and feel claustrophobic. it’s ALL rigged now. there is no underground anymore because they’re waiting to rape you in the trailer parks even.
We are being turned into Boat people perhaps??
Then they will make it expensive for us to anchor or moor in shallow sheltered waters soon.
There are to many humans on this planet, the intelligence and science, to easily reduce and control the population, is available. china proved that and showed the flaws in their system.
Humans, particularly in Africa, South America, and INDIA. Refuse to consider it.
Most of the USA’s Illegal immigrant problem, is rooted in South American OVER POPULATION. That’s a nasty fact. it dosent stop it being, a Fact.
Wow – Blackstone lines up US Agency guarantees to protect the downside of its real estate deals like clockwork. They arranged a similar deal almost one year ago in December 2015:
“Mortgage giant Fannie Mae is backing the Blackstone Group and Ivanhoe Cambridge’s acquisition of Stuyvesant Town-Peter Cooper Village with a $2.7 billion credit guarantee, the government-backed company announced Monday. Behind the story: Fannie Mae Stuyvesant Town and Peter Cooper Village Wells Fargo’s multifamily division will originate the acquisition loan and pass it on to Fannie Mae, which will then sell it off to investors in the form of commercial mortgage-backed securities stamped with its repayment guarantee. This means the U.S. federal government will in effect back the $5.3 billion acquisition, on top of New York City’s $225 million subsidy package for the buyers.”
Fannie Mae’s guarantee converted a 65 percent loss on Stuyvesant Towns previous purchase price ( reported in 2009 ) to a near break-even for its original investors:
This was taxpayers subsidizing big Wall Street deals, to privatize profits and socialize losses. Blackstone’s just lined up another deal to do the same. All should expect a new mega subsidy of Blackstone’s profits by Fannie Mae same time next year ( unless Blackstone has lost its inside track at Fannie Mae with the new administration ).
The inevitable end game here is that most property in the US will be owned by reits. It’s like what Amazon’s done to retail.
One almost certain downside of the REIT / landlord is the effect on those who rent from them. First; the renos are done for cosmetics only, so many structural and necessary utility (HVAC, plumbing, insulation, etc.) problems are papered over, next; the maintenance will be inadequate, causing people to move for want of habitability; and as a final insult, the eviction and collections processes will be highly efficient, burdening the former renters for years to come, absent their almost-certain bankruptcies.
John in Indy
cats out of the bag on this one . WR your reporting
came out prior to MSM cnbc post . P. Schiff had a
5 minute rant subsequently concerning this. Others
will follow. I DuckDuckgo’ ed this topic and your blog comes up open using Open DNS . Your a go to site for me .
this would not stop until Glass-Steagall (repealed by Bill Clinton) Act is back…