Vulture Capital Hits Home: How HUD Is Helping Wall Street and Hurting Our Communities

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“We’re seeing an unprecedented rise of the corporate landlord, and HUD’s Distressed Asset Stabilization Program is just facilitating the process,” said Rachel Laforest, executive director of the Right to the City Alliance. “HUD should employ a credit system that favors nonprofit bidders whose sole mission is community investment and implement stronger requirements for bid winners to preserve homeownership and give struggling families affordable housing options.”


How HUD Is Helping Wall Street and Hurting Our Communities

The financial industry has found yet another way to profit from the distress of homeowners. Investors are trading distressed residential assets – mortgages and vacant properties in severe
arrears — and are building a spectrum of business plans many of which undermine neighborhood and economic stability. There is currently a hot market in severely delinquent mortgages. Banks and government entities are selling them off and investors – particularly hedge funds — are buying them.

In 2012, the U.S. Department of Housing and Urban Development’s Federal Housing Administration (FHA) significantly increased its sale of pools of distressed FHA-insured mortgages through a program called the Distressed Asset Stabilization Program (DASP). The program has a dual purpose: to return and protect FHA’s Mutual Mortgage Insurance (MMI) capital reserves fund to a positive position and “to encourage public/private partnership to stabilize neighborhoods and home values in critical markets.”

This report focuses on the FHA’s Distressed Asset Stabilization Program (DASP). The DASP has the potential to recuperate needed funds for its mortgage insurance fund, preserve homeownership, and create affordable rental housing. Instead, the FHA has designed DASP in such a way as to severely limit its effectiveness in helping hard-hit neighborhoods recover from the housing crisis. Between the start of the DASP program in 2012 and the middle of 2014, the FHA has auctioned 98,100 mortgages, for bids amounting to $8.8 billion. 97% of the auctioned loans have been won by for-profit entities, largely private equity firms. A fair amount is known about the Wall Street entities trading in “distressed assets.” This report examines their business models and how their business interests are often in direct conflict with the interests of homeowners, renters and their communities.

More here…

Copy of the report below…



Vulture Capital Hits Home

4 Responses to “Vulture Capital Hits Home: How HUD Is Helping Wall Street and Hurting Our Communities”
  1. dc says:

    You must know this FACT the National Association Of Realtors-NAR as you said is very deceptive and very organized and has a very Strict code of ethics but it only applies to its members,you and me and the general public we do not apply.They are 1/2 click above satan himself they want your home and will do what they must to get it.They will never rat another member out and will fight like a mo…r f…er for one of theirs.This is no joke I was witness to a friends home sale and she was not versed so they railroaded her and escrow and title finished her off.They are one of the most powerful lobbying bunch in DC,so you combine them with the banks and the trust and title clearing companies and the fact the the cities,counties have zero incentive when these crooks [realtors,Brokers,Agents]will scoop up properties using fictitious business’s,DBA’s,and fictitious names so to insulate each layer as they learned from lenders.

    they will transfer so transfer tax for the county,then tear it down no permit needed for these fools,rebuild,re asses big prop tax increase for the counties and more transfer tax and thats why unless we start taking to the streets and let them know it will only get worse.

    The recorder records whatever they want so when you look up your agent/broker and you dont see them they are working with a fictitious name or biz entity and in California they are encouraged to do this and give tips on the ways to expedite your dba.I shit you not my friend still doesnt know who the real buyer is and their loan still shows as open.Spread the word.

  2. Mystify says:

    Right on bobbi, I totally agree with voting incumbents out! Let’s start with rick scott florid duh governor, he has done nothing to help fl homeowners in floreclosure, he thinks we are all scum bags. Well I am definitely going to vote him out!

  3. BOBBI SWANN says:

    Very well put, Somdaysarelikethis! There is one beam of light, though. The NAR (National Assn. of Realtors) reported this past week that cash sales are wayyyy down, at least here in Florida. That is definitely an indication that the so-called cash flow of free monies available to the REITS have come to a dead end street. However, if the gov’t continues with more and more of these insane programs for so-call ‘revitalization’ it could spin right back up again. Best thing to do is to vote every incumbent out of every office, no matter what the party line! We gotta get those old cronies out of office who have made it their entire career out of floating from one political position to another and reaping nothing but greed for themselves!

  4. Would you believe we could hit a second bubble burst so soon? Look for it! In Memphis multi-parcel purchases owned by investment banks are parceled out to property management companies who then renovate and market internationally as package sales to small investors, mainly for cash. Investors in Australia, Canada, China, even in California and Florida can’t believe they can buy a renovated house for $100,000 and rent it for $1000per month and someone else does all the work. Oh that it would be true! These are sold sight unseen like time shares as investments to investors who are led to believe a positive cash flow without hands on is a great way to invest in real estate. Nothing but turnkey operations. If sold cash or with hard money, no appraisals or bank is needed so prices are rising from their previous low. In some areas it has led to increased rents but in other they sit vacant. Tending to be in neighborhoods that were sold at the height of the bubble on suspect loans that then defaulted. Owner occupants cannot get credit to buy these houses and often they would not appraise high enough if they could. Cash flow erodes when renters default, can’t pay the high rents and houses must be remodeled again to re-rent, plus property management fees and high vacancies. When this bubble bursts we will still have derelict housing but in the meantime the investment banks are recouping their losses and riding themselves of the shadow inventory by passing them off to small investors who are buying a pig in a poke.

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