Possums moved in to the backyard. And now, the proud owner is Bear Stearns (NYSE:BSC). The second biggest underwriter of mortgage-backed securities in the United States is rapidly becoming also a major owner of split-levels, neo-colonials, and Spanish-style bungalows.
"Bear Stearns and its affiliates are listed as buyers of at least 53 homes so far this year in San Diego County, California, 48 in Maricopa County, Arizona, and 40 in Cuyahoga County, Ohio, according to a search of property records. "JPMorgan, the third-largest U.S.
bank, and its subsidiary Chase Home Lending acquired at least 194 homes this year through foreclosure in Wayne County, Michigan. Merrill, the third-biggest securities firm by market value, and its mortgage unit, First Franklin, took possession of at least 87 homes this year in San Diego County, California. Citigroup and affiliates are the new owners of at least 47 homes in Clark County, Nevada.
"'Our expertise is in lending money to people to buy homes, it's not in owning homes,' said Chase Home Lending spokesman Thomas Kelly." What's Bear Stearns going to do with the places? It can let Mr.
Market do his work - putting the houses on the market and accepting whatever price he gives. But if it sells, it risks depressing prices of other homes in the area - many of which it owns! What's worse, "it will have a decimating effect on the mortgage-backed securities market when lenders start facing the music and letting property go at whatever price people will pay," says a local lender.
But what did Bear Stearns expect? When its collateral goes down in price, so do the financial abstractions that rested upon them. On the other hand, lenders can turn their backs to the music.
But the music keeps playing.
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