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companies may be generating positive monthly cash-flow returns while
others admittedly are generating
negative cash flow.
What happens if these same financial institutions decide to sell thousands of their homes at the same
time that banks decide to unload
their shadow inventory and private
homeowners elect to sell at perceived housing-market peaks? The
answer: Home prices will decline.
So hopefully, such a confluence of
events will never happen.
• • •
With less new-home construction
and near record-low mortgage rates,
the industry may need more flex-
ible underwriting guidelines to help
home sales continue to increase and
shadow-inventory levels decrease.
Until the U.S. economy begins to
further stabilize or even improve,
mortgage professionals will have to
continue working in a hardly normal
real estate market.
Whatever the future may hold for
the mortgage industry, however, it’s
important for mortgage profession-
down lately, that percentage re-
mains significantly elevated from
where it stood in the first half of the
because many homesellers prefer
to sell their properties to all-cash
buyers who don’t need to qualify for
a loan, all-cash institutional buyers
tend to outbid small investors who
may need third-party loans to qualify. As a result, more institutional investors (i.e., Wall Street and hedge
funds) are buying vast quantities of
homes with the intent of holding on
to them and then renting them out
to long-term tenants. At the same
time, these buyers probably hope
that home values will increase in
This past July, Morgan Stanley projected that the buy-to-rent sector
would grow from $17 billion in 2013
to $100 billion in the next few years.
Several large institutions such as
The blackstone Group and American
Homes 4 rent have purchased tens of
thousands of homes with their buy-and-hold strategies.
Many of these same financial
institutions have plans to securi-tize their rental-income streams or
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