JAN 23 2014

First as Tragedy, Then as Farce

Banking, Capitalism, Financial Services, Hedging, Infrastructure, United States, Wall Street

Bankruptcy Filings...

Bankruptcy Filings. (Photo credit: MyEyeSees)

Wall Street investors in need of a replacement for the former cash cow of mortgage-backed securities (pre-bailout, that is) only had to look as far as a massive, bargain basement-priced stock of used houses obtained through bankruptcy sales coupled with a corresponding, unparalleled increase in prospective renters (aka former homeowners with few options for housing and little or no credit) to become, alas, landlords. Consistent with a strategy wherein these profit maximizing landlords’ optimal strategies involve segmenting renters by observable credit quality and bankruptcy status, these new mega-landlords have chosen to securitize the aggregate rental payment streams in tranches. Sound familiar?

See the following on this developing story:

http://www.housingwire.com/articles/28708-are-rental-bonds-driving-up-the-rent

http://www.housingwire.com/articles/27590-blackstone-to-sell-bonds-backed-by-lease-payments

http://www.bloomberg.com/news/2013-10-23/blackstone-creating-rental-home-bonds-after-buying-spree.html

http://ww2.cfo.com/capital-markets/2014/01/securitization-back-dead/

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