Now it is all clear…

They are selling the foreclosures in bulk so they can securitize the rental incomes!

This is not going to end well…

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Plotting a Securitization Sequel

Four years after mortgage-linked deals played a starring role in the worst financial crisis in decades, banks and real-estate investors are at work on a new type of security tied to the housing market.

This time, financial firms are seeking to engineer deals backed by the rental payments of residents living in previously foreclosed homes.

In recent months, firms such as Colony American Homes and Waypoint Homes have snapped up houses in foreclosure and rented them. Backed by investment banks and credit-rating firms, these firms think they have spotted a new opportunity: Packaging thousands of those rental payments into securities and selling them to other investors, a process known as securitization.

Potential issuers, like Colony and Waypoint, are seeking to create and sell these securities to tap outside investors for capital they in turn can use to expand their businesses.

They aim to entice investors with returns that could look even more alluring should interest rates remain at or near historic lows.

Rest from the WSJ here…

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4closureFraud.org