Report: Hedge Funds Buying Distressed Properties at Alarming Rate

It’s been eight years since the global financial crisis sent American homeowners into a tailspin. Many were fighting tooth-and-nail to keep their homes, and millions lost that fight. For a significant number, it was an uphill battle as they coped with job losses and stagnant wages on top of the plummeting value of their homes and toxic mortgages. tighteneddollarroll.jpg

And now, private equity firms and hedge funds have found a way to exploit the holes left in these communities. Wall Street is snapping up distressed properties from Freddie Mac, Fannie Mae and HUD at an alarming rate, according to a new report from housingwire.com.

In fact, researchers discovered that some of the very same corporations responsible for the housing market crash are now buying and selling those vacant houses and delinquent mortgages created by the fallout.

Collectively, Wall Street has raised more than $20 billion to purchase notes on more than 200,000 U.S. homes.

These companies are seeing a new market for single-family rental units. Those same people who lost their homes to foreclosure have been forced to rent because they don’t have the credit to buy. Even when they do, they are edged out of the market by large firms that plunk down cash offers before families even have a chance.

This is not just bad for families forced to live in rentals. It’s bad for communities. When people buy a home, they are invested in that property and in that community, in a way renters do not. So when large swaths of the community are renters, we see a decline in the overall quality of the neighborhood and life.

That’s not to say renters aren’t good tenants. But these hedge funds and private equity firms aren’t as interested in upkeep and maintenance. They aren’t invested in these communities. Their only interest is in turning a profit.

Minorities and minority communities have been hit the hardest. During the financial meltdown, the median net worth for African Americans fell by 53 percent. For Latinos, it feel a shocking 66 percent. Whites, meanwhile, saw their net worth decline by about 16 percent. Where white families have generally rebounded from the housing crisis, other ethnicities have not been as fortunate.

When we look at homeownership of single-family homes between 2006 and 2015, we learn the number occupied by renters as opposed to homeowners shot up more than 30 percent.

Meanwhile, Wall Street has crowded single families out of the market for home ownership. For example in Las Vegas, about 55 percent of the homes sold in the first quarter of this year were purchased by hedge funds and private equity firms. It’s the same story across the country.

Worse, many of these actors – again, those same entities that put into motion events that caused the housing market collapse – are purchasing these homes at a discounted rate. This is despite the fact that the owners – the federally-backed Fannie Mae and Freddie Mac – haven’t been willing to extend principal home loan reductions to those who were living there in the first place, even though it’s well known those houses were grossly overpriced.

If you hope to win a battle against foreclosure in Miami, it’s time to contact an experienced and skilled legal team today.

If you’re battling debt collection in Miami or the surrounding areas contact Jacobs|Keeley for a confidential appointment to discuss your rights. Call (305) 358-7991. Also, don’t miss Miami Foreclosure Attorney Bruce Jacobs on 880AM/the Biz, every Tuesday at 6 p.m. on “Debt Warriors with Bruce Jacobs and Court Keeley,” discussing foreclosure topics that matter to YOU.

Additional Resources:
Do Hedge Funds Make Good Neighbors? How Fannie Mae, Freddie Mac & HUD are Selling Off our Neighborhoods to Wall Street, June 2015, HousingWire.com
More Blog Entries:
Report: Housing Debt Saddles More Older Americans, June 20, 2015, Miami Foreclosure Defense Attorney Blog