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Big bets on US housing rebound

business Updated: Dec 09, 2012 21:18 IST

David N Miller, a master of bailouts, steps to the dais and coolly explains how the financial world went crazy.

Miller, a Treasury official working with the department's $700 billion Troubled Asset Relief Program, says to a symposium at Columbia University in remarks posted on YouTube, "History has demonstrated that the financial system over all - not every piece of it, but over all - is a force for good, even if it goes off track from time to time."

"As we've experienced, sometimes this system breaks down. But, it turns out, sometimes when the system breaks down, there is money to be made," he adds.

As the foreclosure crisis grinds on, knowledgeable, cash-rich investors are doing something that still gives many ordinary Americans pause: leaping into the housing market. And not just into tricky mortgage investments, collateralized this or securitized that, but real houses.

Many private-equity giants and hedge funds have spent billions of dollars on thousands of foreclosed single-family homes, purchasing them cheap via bank auctions, multiple listing services, short sales and bulk purchases from local investors, with plans to fix them up, rent them out and watch their values soar as realty rebounds.