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California Law Seeks to Restrain Wall Street's Potential Landlords
Tuesday, October 13, 2020
California is taking steps to avoid a repeat of the conversion
of thousands of single-family homes from ownership to rental properties as occurred
during the Great Recession. In late September, the state's governor Gavin Newson
signed a bill that will give tenants, affordable housing groups and local
governments the first crack at buying foreclosed homes. As homes were foreclosed by the millions following the
housing crisis, Wall Street stepped in and investors, according to Zillow, gobbled
up over 5 million homes, turning them into rental properties. They were bought
as individual homes, via bulk sales of lender real estate owned (REO), or as
distressed loans upon which the investors later foreclosed. It was expected that these houses would return to owner-occupied
status once home prices recovered and the investors, largely big hedge funds,
could realize a profit. Instead they have found ways to manage the
geographically dispersed properties and continue to hold hundreds of thousands
of them.
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