Partner Paper No. 1 – Hedge Funds Attack American Neighborhoods… Again

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A new report by our colleagues at the Center for Popular Democracy and the ACCE Institute uncovers how hedge funds and private equity firms have quietly amassed mortgage notes to 200,000 homes in communities around the USA — and they’re getting special treatment from the government to aid their conquests.  

Hedge funds and private equity firms are getting big discounts when they buy the rights to collect homeowners mortgage payments – discounts from the Department of Housing and Urban Development (HUD) and the Federal Housing Finance Agency (FHFA) – the two government agencies that have refused to give similar discounts to homeowners that aren’t billionaires.

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The billionaire private equity and hedge fund managers snapping up America’s homes from government lenders want to maximize their profits – and they’re set to make big bucks off the backs of regular middle-class homeowners, including many who were victims of predatory loans prior to the 2008 financial crisis. 

One large mortgage investor, The Loan Star Fund is offering only 5-year “interest only” modifications to borrowers, a mortgage type that was often cited as contributing to the subprime mortgage crisis. 

The CPD/ACCE Institute report details how fund managers are revictimizing borrowers in other ways, by failing to maintain rented properties or aggressively pursuing evictions and foreclosures.

In some cases, the institutions seeking to profit from homeowners are the very same ones who helped cause the financial crisis. 

Royal Bank of Scotland (RBS), which has purchased 5,000 non-performing home loans was found in May of this year to have mislead Fannie Mae and Freddie Mac by selling them mortgage bonds backed by improperly-underwritten loans. As an investor in these non-performing loans, RBS stands to profit doubly from the housing crisis.

There is a better way. 

As the authors of the report note, HUD and FHFA can sell these mortgages to Consumer Financial Development Institutions, community non-profits who can help homeowners stay in their homes and repay their mortgages. 

As the titans of finance strengthen their stranglehold on the American economy, the report’s clarion call is a message that needs to be shared. 

Hedge Clippers is happy to present the first in a series of “Partner Papers” from colleagues in the struggle against the hedge fund inequality explosion.  

Download the paper here:  Do Hedge Funds Make Good Neighbors REPORT June 2015

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