Wall Street slumlords’ outrageous new scheme: New securities, backed by rental payments

You’d think that investors would run away from a new Wall Street innovation as fast as Congress runs away from a good idea. But instead, they’re flocking to the latest product peddled by large banking interests, even though they look almost exactly like the mortgage-backed securities that were a primary driver of the financial crisis. These new securities, backed by rental payments, also have real-world implications for millions of renters, who could end up turning in their monthly checks to Wall Street-based absentee slumlords.

Over the past couple of years, private equity firms and hedge funds have bought up over 200,000 single-family homes, mostly discounted foreclosed properties in communities wrecked by the housing crash, such as Phoenix, Atlanta, Tampa, Sacramento, Los Angeles and Riverside, Calif. They have spent billions to scoop up these vacant homes at fire-sale prices…