Dec 03 2013
Wall Street firms are at it again – the same financial industry that sparked the 2008 foreclosure crisis is capitalizing on the mess it originally created by buying up huge numbers of foreclosed properties, renting them back to families and creating another risky investment scheme.
One of the firms leading the mass home buying is The Blackstone Group. Blackstone, which is the world’s largest private equity company, has now become the nation’s largest holder of single family rental homes. The company has spent about $7.5 billion buying up 40,000 mostly foreclosed properties and bundled up the rental payments to create a securitized bond using the home mortgages as collateral.
Blackstone and other Wall Street firms have purchased over 200,000 homes over the past three years for a whopping $20 billion. But critics are extremely nervous about a scheme that seems strikingly similar to the mortgage backed securities crisis which led to the financial collapse in 2008. Not only do these Wall Street firms have no experience as landlords, a failed rental backed bond could potentially jeopardize thousands of families who could face eviction regardless of whether or not they miss their rental payment.
GUEST: Laura Gottesdiener, journalist and activist, and author of A Dream Foreclosed: Black America and the Fight for a Place to Call Home. She has a new article in TomDispatch* about this story, called How Wall Street Has Turned Housing Into a Dangerous Get-Rich-Quick Scheme – Again
ERRATUM: Laura’s article was erroneously announced as having been published in Mother Jones
Click here to read Laura Gottesdiener’s article.