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For the life of me I cannot understand the logic of massive foreclosure campaigns like the ones the banks have been onto. There is already a surplus of housing
by yardie 13y ago
For the life of me I cannot understand the logic of massive foreclosure campaigns like the ones the banks have been onto. There is already a surplus of housing for the next few years (outside the obvious top 10 cities) so how does forcing people out of their homes (the ones that have paid up) benefit the banks? the neighbors banks? the neighbors or the town?
Maybe there is a bigger picture that I'm missing.
- rdouble 13y agoPrivate equity firms are buying the foreclosed houses then turning them into rentals. This was a growing concern in Atlanta when I lived there. It seemed like entire neighborhoods were being bought up. http://www.bloomberg.com/news/2012-10-17/private-equity-in-atlanta-after-picking-phoenix-clean-mortgages.html http://www.bloomberg.com/news/2012-10-17/private-equity-in-a...
- makomk 13y agoSo, basically: Step 1: Fraudulently foreclose on people's mortgages Step 2: Sell the houses to private equity firms who will rent them out to all the people who are now homeless due to foreclosures Step 3: Profit!
- yardie 13y agoIf those prices are correct then the auctions are priced at less then the price of land, material, and labor. In this day and age it's very difficult to construct a single family home for less than $60K. Unless you are using cheap material, microscopic plots, and a lot of unskilled labor. The banks are willing to take a bath on their own profit to please private equity investors? That doesn't add up.
- rdouble 13y agoThere's also an demographic dynamic at play unmentioned in the article. Unfortunately, in Atlanta the racial makeup of the neighborhood has a lot to do with the value of the house.