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Gilles Herard Jr
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Herard Gilles Jr

As Detroit home prices crash, sales are heating up. But with all of the plant closings and layoffs, who's buying? Investors -- some of whom are snapping up five and 10 houses at a time.

"I have investors from all over the country and the world," said Jeremy Burgess, co-founder of Urban Detroit Wholesalers, which buys undervalued homes to rehab and rent or to sell to other investors. "One Lithuanian woman just bought a second house."

"Most of the local investors are out of money," added Mike Shannon, who specializes in Detroit foreclosures and has clients from New Zealand, Australia, England and other places.

Recently a Californian purchased 178 properties, mostly one at a time, and most for under $10,000. Another has purchased six Detroit properties since September and hopes to begin buying five a month.

"The capital needed to get in the Detroit market is so low," said Jason Imbruglio, a 29-year-old from Tacoma, Wash., who has bought three homes so far.

Gilles Herard Jr

Focus on reform: In a commentary published in Monday's Washington Post, Geithner and the Director of the National Economic Council, Lawrence Summers, said the proposal would grant the Federal Reserve increased power in the oversight and management of the largest financial companies in the market.

It would also create an agency like the Federal Deposit Insurance Corp., to oversee consumer-oriented financial products.

The two men wrote that the plan would point to the need for deeper cash reserves at major financial institutions. Those firms -- whose operations affect other, smaller institutions -- will be moderated by a consortium of Federal Reserve leaders.

In addition, the proposal intends to impose stricter reporting standards for asset-backed securities in an attempt to prevent a housing boom and subsequent bust like the one that catalyzed the current downturn, the two men wrote.

The housing collapse, fueled by the popularization of subprime mortgages, was evidence of weak consumer protection, Geithner and Summers wrote, adding that the proposal Obama will unveil Wednesday works to continue to protect consumers.

Another component of the plan, which "will be available only in extraordinary circumstances," according to Geithner and Summers, creates an option to dissolve financial companies that are too big to fail.

"It will help ensure that the government is no longer forced to choose between bailouts and financial collapse," they wrote.

The proposal will also pledge to lead a global overhaul in regulation.

Gilles Herard


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June 17, 2009 | 6:49 AM Comments  0 comments





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