Blackstone Group profits from Stolen Middle Class Homes

Editor’s Note: Blackstone Group’s special relationship with banks and county recorder’s offices allowed them to buy blocks of illegally foreclosed homes for pennies on the dollar.  A significant percentage of these homes purchased in the foreclosure crisis had fraudulent paperwork, forged signatures, and were “owned” by MERS. At some point, when rentals are not so profitable, Blackstone will turn around and resell these homes that lack clear chains of title to unsuspecting buyers.

Blackstone Group LP US home rental giant created in $20bn deal Merger of Blackstone and Starwood units covers 82,000 houses after buying foreclosed properties

by: Javier Espinoza in London and Kara Scannell and James Fontanella-Khan in New York

Two companies that bought thousands of homes after the US foreclosure crisis that began a decade ago are planning to merge, creating the country’s largest owner of rental houses and marking the culmination of a huge private equity bet on the US housing market. Blackstone’s Invitation Homes and Starwood Waypoint will together have a portfolio of 82,000 single-family homes in 17 markets across the US. Invitation Homes shareholders will own roughly 59 per cent of the merged company, with the remaining 41 per cent held by Starwood’s investors, in the all-share deal announced on Thursday.

Both firms’ founders saw an opportunity in the wake of the financial crisis to consolidate the disparate US housing market and to prove that owning and managing a portfolio of single-family homes could be a lucrative business. Houses had historically been rented out by small-time landlords, rather than large corporations. Barry Sternlicht’s Starwood Waypoint merged with Colony American Homes, backed by real estate mogul Tom Barrack, a close friend to President Donald Trump, in 2015. Mr Barrack sold his stake in the combined company in June.

Blackstone floated Invitation Homes earlier this year. The combined portfolio will still represent less than 0.1 per cent of the more than 90 million single-family homes in the US, and just 0.5 per cent of the nearly 16 million homes for rent, the groups say. Invitation Homes’ “emphasis on local density and boots on the ground . . . should help create a leading, sustainable residential rental platform that over the long term has growth potential within both the single-family rental and broader residential housing markets”, Jade Rahmani and Ryan Tomasello, analysts at Keefe, Bruyette & Woods, said in a note to clients.

The group’s combined portfolio is concentrated on middle class homes, and nearly 70 per cent of its revenue comes from the western US and Florida. The merger will result in $45m-$50m in annual savings to the costs of managing the portfolios, which have substantial geographical overlap.

Blackstone, which owns 70 per cent of Invitation Homes, will emerge with 41 per cent of the combined group. The total enterprise value, including debt, of the combined company will be roughly $20bn. The business will be led by Starwood Waypoint chief executive officer Fred Tuomi. The companies have sought to take advantage of the post-crisis decline in home ownership rates, when mortgage rules tightened and a growing numbers of families rented homes instead. The current US home ownership rate of 64 per cent is down from more than 68 per cent a decade earlier, according to Census Bureau statistics. Invitation Homes says it provides rental homes to middle class families looking to live in “desirable neighbourhoods in convenient proximity to major employment centres, good schools, and transportation corridors”.

Yet the institutional ownership has also generated some criticism. A December 2016 study by the Atlanta Federal Reserve found that some large private equity investors have uniquely high eviction rates. “One possible reason large corporate landlords backed by institutional investors may have higher eviction filing notices is that they may routinely use eviction notices as a rent collection strategy,” the study found.

Additional reporting by Judith Evans

11 Responses

  1. Beluved2009 — who were other players involved? Freddie or Fannie? Any others? Most do not realize that all this goes way back. Please leave your email — going to see if beluved works.

  2. Is this the same Blackstone which owns Bayview Loan Servicing LLC in Coral Gables Fla?

  3. I’m trying to buy my property back and the lawyer said will sue WFB & BSI

  4. […] way in the face of illegal activity, theft, law breaking and corruption run-amok.  Thank you to Neil Garfield for fighting the good fight, raising awareness and sharing this important consumer […]

  5. Our legal system has transformed into an “Anti-Robin Hood System” of government, where the gullible American people have been distracted with racism, and the Middle East, when the real invasion was here when we were seized by Wall Street resulting from trickle down economics. I and my husband have been fighting unlawful foreclosure on our primary home off and on since 2003. We’ve been fighting so long, I call America “The Planet of the Elite”, because we were fighting right before the bubble hit, and remember witnessing the Wall Street takeover right before our eyes. We’d be sitting in the law library, and see tons of books removed from law library shelves that would help consumers fight against the unlawful acts of the banks. Also, getting an attorney on a contingency fee wasn’t hard before 2005. After the 2005 bankruptcy law changes, there must have been an agreement to let people get foreclosed on because many who knew the disaster was going to come, made a fortune. Ours is a too long to explain here real life story, but what my husband has gone through, is very similar to the character Eddie Murphy played on “Trading Places”. This particular article about Blackstone grabbed my attention because one of the judges that remanded us, whose also in collusion with the servicers, has financial disclosures that showed BlackRock, which is affiliated with BlackStone. The worst part of all is realizing the judicial system covers for the unlawful actions of elite judges, and so far it seems, the justice dept. is only concerned about what’s done to the elite. We don’t have a fair system at all, which is why we are sounding the alarm to show that we are victims of sewer service. The judge unlawfully entered a default judgment on 6/21/17, even though I timely filed a reply to every motion entered. We are tired, but we must have a gov’t for the People.

  6. So get “polled” today. No questions on bank fraud. And, I asked them — why NOT???

  7. New Jersey lawsuit by female employees charge predatory lending, deceptive practices, sex acts and stripper parties in the office

  8. Reblogged this on California freelance paralegal and commented:
    The large corporate landlords not only charge higher rents than most other landlords they also fail to maintain the rental properties. All they care about is profit and nothing else.

  9. There are no laws, it is a gold plated Somalia. The only real question is which gang is going to rob you.

    Make it a Great Day.

    Scott Thompson

  10. Thieves

  11. This is old news and who is the mortgage holder of blackstones rental properties, jp morgan chase. I saw the pattern a long long time ago when they were working on stealing my home in desirable deerfield beach Florida in their opinion anyway not mine and thats check iut eastway park subdivision in deerfield beach. Invitation homes bought quite a few homes up in foreclosure in that subdivision. No wonder Chase bank reneged on 2 loan mods with me. They were out to steal my home and they were not going to let up. Some small investors bought it at foreclosure auction. I fought as long and as hard as i could.

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