$700 Bailout ... Does this mean that the gov't is going to be selling houses?

A local well know DC Investor has said that this bailout deal is going to be great for investors. One reason is that he believes that the Fed. government is going to end up in the home selling business … meaning they are going to buy out bad assets from banks and then deal with them by either renegotiating the bad paper, or by foreclosing on those assets that are unable to be renegotiated. He thinks that the government is then going to end up selling those foreclosed assets (houses) back to both commercial and private buyers who will be able to buy these properties for .30 - .40 on the dollar. I’m looking for opinions on this - and if this is in fact what others think. If so, how are you planning to take advantage of these deals when they become available? Thanks for your input.

By the way, if you are in the Washington DC area, let me know if you are interested in discussing this further. I will be looking for business partners to take advantage of this great opportunity, should this be the case.

During the course of buying up mortgage backed securities the government will likely become the proud owner of many foreclosed homes. I would not get too excited at the prospects of easy pickings and profits. This is similar to the late 80’s early 90’s when the govt setup the Resolution Trust Corp. (RTC) to deal with the assets of failed banks and thrifts. There were thousands of REO properties owned by the RTC and simply making an offer on one of these properties was a bureaucratic nightmare. You won’t be dealing with decision makers but simply policy followers. Having said that, if you are patient and learn the rules of bidding on these properties then you may find reward.