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Next mess:

Hedge fund are creating the first security that would be backed by home-rental payments.

The bonds would work similarly to mortgage-backed securities – only the flow of investor returns wouldn’t come from monthly mortgage payments, but rather income from rents of thousands of tenants living in formerly foreclosed properties. Sale of such bonds could help investors, such as Waypoint, repay their lenders and raise funds to buy up more foreclosed houses, helping the broader housing market absorb the inventory of vacant homes.

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