Goldman Sachs is betting on a housing turnaround.
The firm that made billions shorting mortgage-backed securities prior to the 2007 housing collapse is starting a new fund to purchase mortgage bonds, according to Bloomberg News.
The new fund, which will be called The U.S. Housing Recovery Fund, according to Bloomberg, is set to complete its first round of fundraising on April 1st. Bloomberg reports that the fund will focus on mortgage securities not backed by Fannie Mae or Freddie Mac -- many of which are currently rated the same as "junk" bonds (which are also in vogue these days, reports The Wall Street Journal).
This is not the first hint of Goldman's interest in mortgage debt. In February, the New York Fed sold Goldman $6.2 billion worth of mortgage-backed securities once owned by American International Group.
Goldman's decision to bet on an upturn in housing comes as some economists are starting to hope for a bottom in housing, despite continued bleak news in that market. In January the S&P/Case-Shiller home price index of 20 major housing markets fell to its lowest point since 2002 -- down 34.4 percent from its peak in 2006.
At the same time, however, home builders -- typically the canary in the coal mine when it comes to the overall health of the U.S. housing market -- are growing more optimistic, in January filing for the largest number of new building permits since October 2008.
Goldman Sachs's housing bets have been prescient in the past. Famously, the firm is said to have made around $3.7 billion betting against the the mortgage-backed securities that proved so toxic to much of the financial system, at a time when almost everyone else on Wall Street was still enthusiastically eating those assets up.