First Foreclosure-Rental Bonds Come to Market Without Ratings

“Large numbers of displaced homeowners who have defaulted on their mortgages have no choice but to rent”


Foreclosure-rental bonds come to market without ratings

Aug 24 (IFR) – The first so-called real estate owned (REO)-to-rental securitizations in the United States may go ahead without credit ratings, as agencies ponder how to assign grades to the new and potentially risky products.

In the planned deals, real estate and private equity investors would buy up blocks of foreclosed properties and rent them out to borrowers who have been displaced due to their unpaid mortgages. The rental payment streams – and possibly the proceeds from an eventual sale of the properties – would provide payments to bond investors.

“There are unrated deals in the works,” said Suzanne Mistretta, a senior director at Fitch.

“Right now investor demand is focused on short-term [two years or less] unrated offerings, but by next year, we could be presented with a new rated transaction. Beyond a two-year average life, investors may want a rating.”

Over the past three months, Fitch, S&P, DBRS and Morningstar have each published initial assessments of the potential risks of the new asset class. But no agency has yet published official criteria for the product.

Rest here…


One Response to “First Foreclosure-Rental Bonds Come to Market Without Ratings”
  1. what? says:

    Hummm lets see now if I read this right?! steal the home then rent to the already burdened public that they stole the properties from, well guess what I see…. landlord/owners will hopefully be hounded into submission by the call of all renters to fix the crap that falls apart as you “the banks and investment firms” with continued stealing for profit and who started the raping of the people, will indeed have some payback although small but very possibly a chronic situation coming your way. Chronic is just that a continual …let call it “Reverse leaching” of resources of the host. These so called renters that have to pass your test for qualifying (mostly displaced or walk away people) to RENT the stolen properties will be quite demanding hopefully. All of the house repairers will be demanded to be kept up in perfect condition at all times so good luck there. Most would rather have a one time big hit in the pocket that a continually biting annoyance that will indeed hit your bottom line In Time, kudos big banks and investment firms…march on, I wish bountiful ill upon you and your endeavors as you deserve all the evil to be hoisted back onto your ill gotten gains. And the titles are even more Ba$tardized by the hands that have fed you so well. Insanity reigns once again.

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