Former Goldman Sachs Group Inc. (GS) executive Donald Mullen, one of the architects of the subprime mortgage trade, is trying to raise at least $500 million for a fund that will buy foreclosed homes with an eye toward renting them out.
Mullen, who until January was head of the credit and mortgage business inside Goldman’s securities division, began marketing his Fundamental REO Access fund in earnest about a month ago, said seven people familiar with the matter, but who did not want to be identified because they do not work for the upstart fund.
Several sources said Goldman Sachs is serving as the placement agent for the fund and will market it to wealthy investors, including some of its own clients.
Goldman and other investment firms that serve as placement agents can collect fees that range from 1 percent to 2 percent of the total sum raised from investors.
The new fund is part of a growing move by former Wall Street traders, hedge funds and private equity shops to profit from acquiring foreclosed homes and turning them into rental properties for their steady stream of cash.
Two sources familiar with the foreclosed home market said Mullen has told people the fund could raise as much as $1 billion.
Source: Yahoo Finance News