Wall Street is collecting rent payments

Redwood Trust, one of Wall Street’s largest securitizers of mortgage bonds, is now packaging bonds backed by rent payments.

TRD NATIONAL /
Dec.December 06, 2019 12:00 PM
Redwood Trust’s CEO Christopher J. Abate (Credit: iStock)
Redwood Trust’s CEO Christopher J. Abate (Credit: iStock)

Wall Street wants your rent.

Redwood Trust, one of Wall Street’s largest securitizers of mortgage bonds, is now packaging bonds backed by rent payments. The move marks a broader interest by Wall Street in rental properties amid of rise of home purchased by institutional landlords, rather than families or individual owners.

Doubling down on this bet, in October, Redwood paid $490 million to purchase CoreVest American Finance LLC, which is a lender to landlords. And the company recently sold a $376 million bond package backed by rent payments.

With its acquisitions, Redwood could originate more than $3 billion of loans to landlords and house flippers in 2020, according to the Wall Street Journal.

Investors are increasingly making up a larger part of the homeownership market. Purchases by such investors looking to flip or act as landlords accounted for more than 11 percent of U.S. home sales in 2018, their highest share on record, according to the Journal.

The first to try to take advantage of this trend was in 2013 when Blackstone Group’s Invitation Homes Inc. and American Homes 4 Rent, had begun to sell bonds backed by rent payments for thousands of homes they bought and leased out. [WSJ]Keith Larsen


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