Posted on 08/18/2011 10:25:35 PM PDT by ExxonPatrolUs
NEW YORK () -- The largest transfer of wealth from the public to private sector is about to begin. The federal government will be bulk-selling the massive portfolio of foreclosed homes now owned by HUD, Fannie Mae and Freddie Mac to private investors -- vulture funds.
These homes, which are now the property of the U.S. government, the U.S. taxpayer, U.S. citizens collectively, are going to be sold to private investor conglomerates at extraordinarily large discounts to real value.
You and I will not be allowed to participate. These investors will come from the private-equity and hedge-fund community, Goldman Sachs(GS) and its derivatives, as well as foreign sovereign wealth funds that can bring a billion dollars or more to each transaction.
In the process, these investors will instantaneously become the largest improved real estate owners and landlords in the world. The U.S. taxpayer will get pennies on the dollar for these homes and then be allowed to rent them back at market rates.
On Wednesday, the Federal Housing Finance Agency (FHFA), the Department of Housing and Urban Development (HUD) and the U.S. Treasury Department issued a Request for Information (RFI) concerning the disposition of the inventory of foreclosed homes owned by the federal government.
An RFI is ostensibly a way for the federal government to get input from the private sector on how to accomplish the goals laid out in the request. But that's really just a facade, as the RFI was structured by the investors to begin with.
In reality, the RFI is a way for the members of Congress to find out if they can get away with bulk-selling these homes to private companies without incurring the wrath of their constituents, taxpayers and former owners of the properties.
Assuming taxpayers don't push back, the next step will be to issue a Request for Proposals (RFP). The RFP will be the bid and plan for these homes by investors.
The way to keep taxpayers from pushing back is to structure the RFI so that the real intention, the bulk sales, is masked by feel-good goals, such as stabilizing neighborhoods and increasing the supply of rental properties.
As intended, the mass media are playing their part in classic style. Every major newspaper in the U.S. has run articles discussing the plan as a rental conversion, allowing readers to assume that Fannie, Freddie and HUD will be renting the properties directly to families who need housing. And although there is an allowance for these kinds of rentals, it is a minor political facade to the obvious true goal of bulk-sale privatization of these homes.
The investors in this program have been waiting for this opportunity since the portfolio of homes owned by HUD began to spike in 2007, when foreclosures surged first in the "Rust Belt," principally Ohio and Michigan.
Since then, of course, the systemic collapse of housing has engulfed all of the major urban coastal regions of the U.S., as well as Phoenix and Las Vegas, and caused the homes owned by Fannie Mae and Freddie Mac, which are now under the direct control of the U.S. Treasury Department, to spike as well.
Even before this crisis occurred, HUD, i.e. the U.S. government, was the largest improved real estate owner in the world, because of its portfolio of foreclosed homes, which is classified as "real estate owned" (REO). The entire massive HUD REO Portfolio is quietly managed by a handful of private firms already, a group listed as Management and Marketing Contractors.
These M&M companies are principally owned by and employ former high-ranking government officials from the various germane agencies -- the Treasury, HUD, FHA and others. And they will provide the necessary access to the current government employees who are tasked with bringing this program to fruition. Once the privatization is complete, those government employees will move from their positions, and many will take up new employment at one of the M&Ms or the new vulture funds.
I am not currently aware of any way for retail investors to participate in this process.
It is probable, however, that once the privatization has occurred and the properties are generating rental income for the investors, the initial investors will cash out by forming real estate investment trusts (REITs), real estate operating companies (REOCs) or limited partnerships (LPs) that will be made available to retail investors.
OR, they could let them as Section 8 housing, with its guaranteed monthly check.
Foreign investor will buy them up for a dirt cheap prices.
How can I become a crony?
A month later, HUD put the house up for sale at $286,000.
There are millions of foreclosed houses owned by Uncle Sam. Anyone interested just needs to do a little research to find a bargain.
yitbos
for later
I’m not really big on infusing money into government, but this is honestly the worst possible way to manage this mess. I’m sure the story is that what the government’s actually selling is contracts to manage the homes, and not actually selling the properties.
Personally, I think every single city and county and state should be demanding that these homes go up for public auction, with auctions held at each home. There’s a load of considerations - these properties should be revalued to current market prices, they should be available to the housing market, and local governments shouldn’t be denied the opportunity to collect sales and property taxes on the properties.
But for all I know, the real deal is to sell contracts to rent the properties out, and the federal government is paying the property taxes based upon the old and outdated property values and cities and counties don’t want to disturb the cart that is funneling federal dollars into their pockets.
It’d be interesting to find out some of these details. I’m sure there’s a newspaper working on it right..about...never.
HUD used to sell these homes directly to the public, at a discount, listed through a local contracted realtor. First they went to families/Individuals, and you had to live in it as your primary home for at least two years.
If they didn’t sell within 4-6 weeks of being listed that way, they were made available to investors, with the price falling each week until the unit sold.
If that didn’t work, auctions were used to dispose of the rest.
They also had the VERY effective Officers/Teachers Program, allowing them to buy homes within certain “Distressed” zip codes, for 1/2 of the listed price,provided it was thier primary home for 5 years, a VERY GREAT DEAL, putting these people in to the neighborhoods they worked in.
Unfortunately, this program was corrupted by Baltimore, DC, and Philly cops, who would buy the homes, then RENT THEM or sell them to a straw buyer, pocketing the mortgage, knowing the contracted local inspectors could be bought off.
What’s going to happen here is the typical DC two-step, with money going DIRECTLY in to Democrat Coffers, through corruption, and straw buyers like ACORN housing.
Thank you for posting this. I have sold & bought HUD homes for many years. As of about a month ago they stopped me from buying or selling their homes. You have to be one of their rich friends to buy them now.
Renters inevitably eventually trash the place. Welcome to the third world america.
The RFI is pretty clear—they’re talking about disposition (that is, the sale) of the properties. Here’s the first paragraph:
“The Federal Housing Finance Agency (FHFA), in consultation with the U.S. Department of the
Treasury and the U.S. Department of Housing and Urban Development, is issuing this Request
for Information (RFI) to solicit ideas for sales, joint ventures, or other strategies to augment and enhance Real Estate-Owned (REO) asset disposition programs of Fannie Mae and Freddie Mac (the Enterprises) and the Federal Housing Administration (FHA). The agencies are exploring alternatives that will facilitate the current and future disposition of REO, improve loss recoveries compared to individual retail REO sales, help stabilize neighborhoods and local home values, and where feasible and appropriate, improve the supply of rental housing.”
Social justice, of course. It’s only fair. /s
Play golf
The BHO crime syndicate just keeps rolling on.
and not one person with any power to stop him does anything.
Hello dictatorship.
My god. We should never have bailed these bums out. Wtf!
sfl
Looks like the RTC all over again.
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