Who Is Your Landlord?

Securitized bonds are bonds backed by a financial asset. Practically any financial asset can be securitized and many have been. For example, mortgage backed securities (MBSs) were widely attributed as a cause of the recent recession. Other financial assets such as song catalog royalties, credit card balances, car loans, and life insurance have been securitized as well. A recent addition to the securitized bond market are rental-backed bonds. Financial firms are buying foreclosed homes and renting them out. They then sell bonds whose interest payments are made from the rental cash flows from these houses. Whether the model of selling rental bonds will work remains to be seen, but it appears that there are several investment banks prepared to make the plunge.