Are record-low interest rates masking high-cost mortgage lending?

Are record-low interest rates masking high-cost mortgage lending?

Five leading economists weigh in and the answer may surprise you

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Investments / The Ticker

Rental market spurs bank competition

Keeps credit lines competitive

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Gary Beasley, one of the earliest to build a corporate rental-home business amid the U.S. foreclosure crisis, said in a Bloomberg article that the birth of a bond market backed by the properties is compelling banks to lend more cheaply to firms like his.

“It’s nice to have the competition of securitization to make the banks want to keep their credit lines competitive,” said Beasley, co-chief executive officer of Starwood Waypoint Residential Trust.

“We basically went to Citi and said, ‘The market’s changed, we’d be interested in talking to you about getting more proceeds and cutting our rate. If you’re willing to entertain that, we’d love to talk to you about it. If not, we’re interested in perusing a securitization, because it’s just too compelling,’” he said.

On Tuesday, Starwood Waypoint Residential Trust (SWAY) announced it purchased two separate pools of non-performing loans for $218.7 million. The total purchase includes 1,294 non-performing loans and 146 REO homes.

“NPL purchases continue to be a great channel for acquiring single-family homes in our target markets at attractive discounts while enhancing equity returns through alternative resolutions,” Beasley said.

Source: Bloomberg
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