Wall Street Bundling Rents into Investment Securities: Big Money Scheme or... Something Bigger?

So as I was checking my feeds this evening, I came across an article entitled Wall Street's Hot New Financial Product: Your Rent Check:

Over the last two years, private equity firms and hedge funds have amassed an unprecedented real estate empire, snapping up Spanish revivals in Phoenix, adobes in Los Angeles, Queen Anne Victorians in Atlanta, and brick-faced bungalows in Chicago. In total, Wall Street investors have bought more than 200,000 cheap, mostly foreclosed houses in some of the cities hardest hit by the economic meltdown. But they're not simply flipping these houses. Instead, they've started bundling some of them into a new kind of financial product that could blow up the housing market all over again.

...

But buying houses cheap and then waiting for them to appreciate isn't the only way Blackstone is making money on these deals. It wants your rent check, too. In November, after many months of hype, the firm released the first-ever rated bond backed by securitized rental payments. Joining forces with Credit Suisse, Deutsche Bank, and JPMorgan (which recently paid a record $13 billion fine to settle accusations of ripping off mortgage investors), Blackstone has bundled the rental payments from more than 3,200 single-family houses, offering investors its mortgages on the underlying properties as collateral. After investors tripped over themselves to buy into the $479 million bond, Blackstone's competitors announced that they, too, would develop similar securities.

"It's just like a residential mortgage-backed security," says one hedge fund investor whose company does business with Blackstone.

Basically, they've bought a ton of residential property on the cheap, driving prices up, thereby pricing the average Joe out of the buying market. But not the renting market. They then bundle these rents as securities and blah, blah, you know the rest--we've seen this before.

It appears that the answer to a thread made almost two years ago is an undeniable "yes":

Was this their plan all along: BUY TO RENT?

But the inevitably of another collapse in the housing market, and the little guy getting screwed in the end, isn't really what caught my eye in all this (although by all means, run with it).

Simply put, I don't like the fact that these Blackstone Group people have so many close ties to our fascist government (check the link on them below). I doubly don't like the fact that these people are now "the largest owner of single-family rental homes in the nation". Look at this pic from the article cited above:


Now. If that doesn't make you a little uncomfortable by itself... this will (and this is where the thread takes what some might call a "bit of a turn"):

Consider Operation Jade Helm 15. "Mastering the human domain"--military personnel blending in with the civilian population for recon/intel deployment. Would it not behoove TPTB to acquire real property assets, in your neighborhood, covertly and without your suspicion, to be used as "logistical centers" in the event of a martial law declaration? Why not have the equipment and personnel already in place, unbeknownst to the ignorant masses?

I warned you I was taking this in a different direction. But think about it. Is this real estate grab all about money, or is there something more to it? Something even more sinister?

I'll leave you with this little nugget to ponder, from Blackstone's Wikipage (horrible, I know):

Blackstone acquired the mortgage for 7 World Trade Center in October 2000 from the Teachers Insurance and Annuity Association.

And not another word about it, naturally.



I will now retreat into my Faraday Lair.

a reply to: NthOther

Next big bubble. When investors in the private equity firms can no longer pay the mortgate due to exorbinant rents - well we know what happens.

It's happening with commerical properties as well.

A nice asymmetrical way to move in a foreign army, and no one would be none the wiser. Foreign troops living ordinary lives mowing lawns and washing their cars while waiting for that one order. No need to fight your way into town when you already live there. Plus it makes it difficult for the US troops to liberate Americans already embedded with the enemy.

a reply to: NthOther

It would be very interesting to compare the locations of these big purchases with civilian gun ownership.

Why not have the equipment and personnel already in place, unbeknownst to the ignorant masses?

Because having an ops center surrounded by Joe and Jane with their scoped AR15s and hunting rifles is not good strategy.

P

originally posted by: pheonix358

Because having an ops center surrounded by Joe and Jane with their scoped AR15s and hunting rifles is not good strategy.

But it's not entirely unfeasible that something like this is going on, at least in the pre-martial-law intelligence gathering bit, which is what Jade Helm seems to be all about to me. Well, that and moving the infrastructure and logistics into place, ready for deployment when needed.

Is it so far-fetched? Or, rather, is it any more far-fetched than anything else we've come to expect from our noble government and it's corporate tentacles?

If the intent is to "blend in" and "master the human domain"... wouldn't doing something like this make a little sense?

a reply to: NthOther

Sorry OP, I have to disagree.

Government is going down another path. CIA / NSA are gathering intel right now. No matter what legislation is passed they will continue to collect the info one way or another. This is the their answer to the problem.

Because of the sheer volume of intel they are collecting, it is impossible to use it in a proactive role. Rather, they will use it once they have identified an individual. This is the way they have always operated.

Quite frankly, they just don't care. When the whole ball goes up, they will be safe in their bunkers or sunning themselves on the beach somewhere in South America. They know the crap will hit the blades and they will just stand aside and watch it all burn, then, they will make all the right soothing noises and get control of whatever Government rises from the ashes.

They intend to be the Phoenix.

They want control of the food chain, they want control of housing. Basically, they want to enslave you but in a way that you don't see it for what it is. That is where the soothing noises come from. How many people are now on welfare? They seem to be winning at this stage.

P

While I don't disagree with the premise that the banks were looking to become landlords and that's why they never offloaded the homes, what do they do this time when no one can afford rents?

I can say right now that if I were going to end up homeless because of a bank needlessly increasing rent, I would burn the home down or in some other way destroy it before I left. I might goto prison for that, but their investment would be gone and in prison I would have food and shelter fixing the initial issue. If 5% of people losing their residence did that the courts wouldn't even be able to keep up.

originally posted by: Aazadan

While I don't disagree with the premise that the banks were looking to become landlords and that's why they never offloaded the homes, what do they do this time when no one can afford rents?

I can say right now that if I were going to end up homeless because of a bank needlessly increasing rent, I would burn the home down or in some other way destroy it before I left. I might goto prison for that, but their investment would be gone and in prison I would have food and shelter fixing the initial issue. If 5% of people losing their residence did that the courts wouldn't even be able to keep up.

When you have a massive amount of people with nowhere to go... well, if they were from another country we might call them "refugees". So they might set up, you know, "camps" or something. They won't call it that, though.

And there always seems to be food shortages in such situations...

I know my conspiracy radar might have a short circuit here, but this whole thing just really rubs me the wrong way.

a reply to: NthOther

Nice thread nice catch overall.

indeed the private equity firm has created yet another Derivative...

but if you dig deeper, you will find the UN Agenda 21 (sustainable development) is one of the most important factors in buying up all those properties.

blackstone is looking far ahead, they know that the remainder of Obama's administration will be hard selling Agenda 21 principles including resettling immigrants to metro areas ...

the next administration will have It's 8 years to fully implement the 17 points of Agenda 21, with the 12 mega city projects in full swing


also Japan and China (among other sovereign states) are buying up property in a frenzy, CA, MI, TX, NC are just the 1st tier, a dozen other states are being bought up~~~ in anticipation of Agenda 21

a reply to: NthOther

I don't pretend to understand the ultimate agenda... but I do know that we the people have to accept much of the blame.

In the latter part of the 2000s, when people were screaming at the top of their lungs about fraudclosure and banksters stealing homes, society blamed the victims and dismissed them as deadbeat homeowners...

In 2008/2009, when the government was bailing out the banksters -- instead of the homeowners -- society called the banksters the producers and the defrauded homeowners the takers...

At the same time, when Obama handed the banksters and investors thousands and thousands of stolen homes to rent and/or just sit on for years and years to keep the housing prices artificially high and rentals even higher, society said nothing...

In 2011, when the state AGs caved to the mortgage banksters and settled a nationwide lawsuit with barely a slap on the hand, with the mortgage banksters only promising to cease their bad behavior for three years, and settlement monies meant for the defrauded homeowners diverted to state coffers, society was deaf, dumb and blind... It's now 2015. That three year period is over. Prepare for Fraudclosure Phase II.

Many many people tried to fight the bankster fraud with whatever resources they could muster, and were thwarted at every turn, while being vilified and condemned and otherwise trampled on... and yet, these are the very people who have thwarted those stealing our homes and trying to take (deny) our property rights.

Many of the founding fathers were adamant believers that as many citizens as possible should be land owners, as it is the simplest way for people to provide for themselves, create a strong and independent populace, and ensure that voters/citizens have something to fight for.

Unless and until we stop viewing property rights as a money-making machine, and understand the underlying strengths of the people owning and working their own land, everyone's property "rights" are up for grabs.

Eventually, the top 10% richest people will be the only property owners, everyone else will rent.

This is not unlike the feudal era of the middle ages, where the vast majority of the population lived in serfdom to support the aristocratic, property owning monarchs.

Well, we all remember what happened after the middle ages...the dark ages.

originally posted by: MystikMushroom

Well, we all remember what happened after the middle ages...the dark ages.

Only they'll call it the "Age of Light" (or something) so that whatever is left of humanity thinks they got a good deal somehow.

It's quite disturbing any way you look at it, neighborhood infiltration or not.

I don't think it's quite that simple. These firms are also buying up properties here in CA, but with the intention of selling (makes no sense to try and rend them out, since rents are much cheaper than mortgages). On the other hand, some firms allow for people to buy in markets where the mortgage to renter ratio is favorable to the homeowner as part of their retirement portfolio (I'm thinking of doing this since the few places I CAN afford in my neck of CA are places I don't feel safe). It makes sense that financial firms would also jump in on it. In fact it makes more sense for them, since unlike us peons they can buy them in bulk. Yes, it IS a money grab. But what isn't?