TOM HUDSON: Warren Buffett also today said that he would buy millions
of single family homes if he could. 2,500 of them went on sale under a new
Federal pilot program. The idea is to sell Fannie Mae-owned homes to
private investors who want to use them as rental properties. As Darren
Gersh reports, these homes may go fast.
DARREN GERSH, NIGHTLY BUSINESS REPORT CORRESPONDENT: Warren Buffett
is not alone. Money-making ideas love company and large investors and
private equity types already have hundreds of millions, maybe billions of
dollars on hand to buy up foreclosed homes and rent them out. At Carrington
Holding, Rick Sharga says the company is ready to buy 30,000 to 40,000
RICK SHARGA, EXEC. VP, CARRINGTON HOLDING CO.: I think we all agree
with Warren Buffett. If we could buy millions of homes, we`d be doing that
right now. There is a lot of capital that`s very interested in
participating in a program like this.
GERSH: Like this, meaning a pilot program announced by Federal
regulators who took charge of the troubled mortgage giants Fannie Mae and
Freddie Mac when the companies were placed under government control. The
Federal Housing Finance Agency today announced a test sale of 2,500 homes
around the country. Focusing on cities from Los Angeles to Las Vegas and
much of Florida, places where housing fell hard. But this is a tiny
fraction of the 700,000 or so foreclosed homes now on the books of
financial institutions. And here`s the problem: Warren Buffett wanna-
be`s say they can`t find enough homes to buy now. Some banks may be
holding off on selling, believing they can get a higher price. Others may
not be carrying foreclosed homes on their books at realistic market prices.
SHARGA: And that could cause a lender or somebody else holding these
properties to have to do a significant write down at the point that they
execute the sale.
GERSH: As investors prepare to become big landlords, economist Dean
Baker hopes regulators will be more creative. He`d like to see renters
offered a chance to become old-fashioned American homesteaders.
DEAN BAKER, CO-DIR., CNTR. FOR ECONOMIC & POLICY RSCH.: The basic idea
is that you have someone come in and pay some nominal amount to buy it
initially and then if they stay there and fix it up and pay their taxes,
live in the place for five years, then it`s theirs.
GERSH: With private equity lining up to buy rental properties,
critics worry the industry that caused the housing crisis is now preparing
to profit from the destruction. But investors argue the bad actors have
gone out of business.
SHARGA: It`s a popular sentiment that the same folks who got us into
this mess are now going to profit on the way back. Fortunately, it`s not
GERSH: While Warren Buffett dreams of buying millions of homes, big
investors have more modest hopes. They figure the market for big investors
and private equity is about 200,000 foreclosed homes over the next two
years. Darren Gersh, NIGHTLY BUSINESS REPORT, Washington.