California's Public School Teachers Provide Hundred$ Of Million$ To Finance 'Foreclose & Flip' Opportunities For Private Equity Fund Buying Bad Mortgage Loans

In Oakland, California, the East Bay Express reports:

• California's pension fund for public school teachers invested hundreds of millions of dollars in a company that has been criticized for foreclosing on property owners and kicking them out of their homes, including dozens in the East Bay, records and interviews show. The company, Caliber Home Loans, is owned by the private equity firm Lone Star Funds and was featured in a New York Times story last week because of its controversial practices.
  
  In an email to the Express, officials for the California State Teachers Retirement System (CalSTRS) confirmed that the pension fund invested $660 million in two different funds managed by Lone Star, and that the company has used the money to buy up distressed home loans, foreclose on the homeowners, and resell the homes. CalSTRS spokesperson Ricardo Duran said that Lonestar officials have told pension fund managers that the investment has resulted in a lower rate of foreclosure than the industry standard. But according to Duran, CalSTRS has not been provided with data from Lone Star to substantiate these claims.
  
  
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  Over the years, Lone Star has relied on billions of dollars from public employee pension funds to buy out "distressed" home mortgages. And CalSTRS, which manages the retirement savings of 879,000 California public school employees, is among Lone Star's biggest investors.
  
  The scale of Lone Star's mortgage business is dizzying. Lone Star has purchased 18,747 mortgages worth $3.16 billion from the federal government and government-sponsored housing agencies since 2010, according to records maintained by the US Department of Housing and Urban Development (HUD). The acquisition of these mortgage loans was made through a government program that policymakers claim was intended to reduce foreclosures — not make them worse.

For more, see California Teachers Have Been Financing Evictions (The teachers' pension fund invested hundreds of millions of dollars into company that has foreclosed on and evicted numerous homeowners, including dozens in the East Bay).

Editor's Note: New York is apparently also having the same problem with this outfit. See Lone Star-Backed Lender Faces Probe by N.Y. Attorney General ("A lender backed by private equity firm Lone Star Funds is under scrutiny by New York Attorney General Eric Schneiderman amid union allegations it may be using predatory practices in its mortgage business").