From the Wall Street Journal:
Boost for Foreclosure Market
Real-Estate Firm Gets Citigroup Loan to Buy Properties to Turn Into Rentals
The Waypoint deal underlines banks' confidence in the investment strategy and may serve as a precursor to another development in the market: Bankers said they have been hammering out details on how to create the first security backed by home-rental payments.
As they do in bonds backed by mortgages and other assets, banks would pool the rents of thousands of tenants living in the formerly foreclosed properties and sell to investors a promised return based on the income the homes produce.
The sale of such a bond would help foreclosed-home investors like Waypoint pay back their lenders while raising funds they can use to buy more houses.
A spokesman for Citigroup declined to comment.
Citigroup and other major banks have held talks with the major credit-rating firms about potential securitizations, people familiar with the conversations said.
In recent weeks, rating firms such as Fitch Ratings and Moody's Investors Service have published research reports outlining their views on potential structured deals.
Fitch said initial deals were unlikely to be rated above the single-A category. One major hurdle to high ratings: the lack of long-term data detailing the likelihood tenants living in previously foreclosed homes will pay rent on time....MORE