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Investments / The Ticker

ABS Vegas: Love or hate REO-to-Rental in 2014

It's driving home prices but can it continue?

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The REO-to-Rental model is the newest asset to gain investors' attention, but what does the future look like for these particular deals?

James Grady, director and bond manager for Deutsche Bank Asset Management, discussed REO-to-Rental opportunities during the ABS Vegas conference.

Grady said investment in REO-to-Rental remains aggressive, and it doesn't bring the usual reservations or concessions seen with other new asset classes.

"The street is looking for another product to sell. Back in the day we had the CDO machine, and I think that they’re looking to replicate something along those
lines," Grady said. "The odd thing about this is you see regulators and academics pushing for this, and it’s at odds with some of the populist tone about income inequality. They see it as a way to get home prices up."

About 46% surveyed said they saw REO-to-Rental as the area of strongest growth as compared to CMBS, CLOs and other new securitization options.

There is likewise strong support among analysts, policymakers and banks, Grady said.

Vincent Fiorillo, global sales manger at Doubleline Group, said pricing in 2013 was off, but he sees better prospects in 2014.

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