Tuesday, September 6, 2011

Morgan Stanley finds investors highly receptive to bulk REO sales idea

Government is soliciting ideas to depose of foreclosed homes.
Analysts with the investment bank released an update to this strategy — which is known as the REBUILD proposal — estimating there are currently 6 million properties in REO, foreclosure or more than 90 days past due.
In its latest update, Morgan Stanley addressed some concerns raised about the proposal, namely that it would not be free-market based with the government-sponsored enterprises becoming landlords and growing their balance sheets. Or the idea that it would be unregulated, giving investors purchasing power at rock-bottom prices without ensuring they have a concern for rehabilitation or neighborhood property values.
"We believe the best solution lies somewhere in the middle, and instead of focusing on what we don’t want, we think it’s better to focus on what we do want, and figure out a way to reach those goals," analysts at Morgan Stanley said.
"In this case, we believe that the goal should be effective ownership and management of rental properties, while retaining some upside for taxpayers if everything works out and home prices recover," according to Morgan Stanley.
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