Oil Rich Sovereign Funds Buying Up Foreclosures?
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As huge quantity of foreclosures pile up, the bundling of multiple properties to large investment funds will be the smart play for both sides. But in these tight times, who has the money to buy billions of risky properties bundled for a deep discount?
Well, let me ask another question, who has been profiting like crazy the past couple of years as oil soared to 4 dollars a gallon? If you answered foreign countries like Abu Dhabi, Kuwait, The Arab Emirates, you would be correct sir. These countries create funds, called sovereign funds, to invest and they are loaded with petro dollars from 140 dollar a barrel oil.
So the next step is to reinvest it, and where is the best investment bargain? Oh, the United States residential real estate, battered by the same 4 dollar a gallon gasoline amongst a myriad of other factors we have covered.
So these countries funds are now planning on buying up billions of dollars of REO property from the banks and mortgage companies at steep discounts.
I am not sure if this is good or bad, but it does rub me the wrong way. Seriously, if you wanted to weaken a country, isn’t what happened the past 5–10 years a great example.
The unidentified fund joins individual US investors, hedge funds and Wall Street banks in kicking the tires of REO homes, which have fallen in value so much that they are now tempting investments.
A sovereign fund would have two distinct advantages over other investors - the depressed value of the US dollar makes the homes a bargain, and sovereign funds have deeper pockets.
The sovereign fund of Abu Dhabi, for example, has a reported $875 billion in assets, while Norway has $391 billion, Singapore has $303 billion and Kuwait has $264 billion in their sovereign funds, which are funded by proceeds from oil sales …
So far, prices on bulk sales of REO properties vary based on location and are selling from 60 cents to 80 cents on the dollar. Hanson started out offering 40 cents on the dollar for about $2.5 billion worth of California properties owned by IndyMac and Washington Mutual but was turned down. The banks refused to comment. via the New York Post.
It probably is a really good time to buy real estate - monthly payments are about equal to market rents ...
The part about the inventory is right on but in my area they are mostly low end and beat up ...
I worked for this man, he is a great con man and has done this in more than States then ...
You're right. If you come from Central Jersey (as the Boss and I do), you go to Florida at some ...
Maybe it was kryptonite...
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I couldn't agree more.
The newspaper has always "stuck" it to the real estate agent with rates that were much higher ...
By the way, homeowners trying to get short sale approval should be aware that lenders are comparing the initial loan ...
Ouch! Thankfully I haven't come across anything like that yet. We normally don't have situations like that in ...
well, the guy was here illegally.
serves him right. 
BY USING FIRST CLAIM INSURANCE ADJUSTERS YOU WILL HAVE THE ABILITY TO LOOK AT YOUR INSURANCE SETTLEMENT AND REALIZE FIRST ...
Comment by Rob Viglione on 11 August 2008:
We should be welcoming foreign investors to pick up distressed US properties. Any amount of capital inflows to the country at this point is a good thing. The important thing will be to ensure foreign investment is not used as political leverage, which is a serious consideration when dealing with sovereign wealth funds. These are political beasts, despite the “wealth funds” title.
Nonetheless, despite seeming large capital bases (Abu Dhabi fund has $875 billion) these sums are small relative to total asset values in the United States. The country goes through scares every decade or so of foreigners buying up assets (I remember hearing about how Japanese would own all of the US when I was a kid), but the reality is that foreign investment is only a fraction of total investment and contributes to stabilizing crashing markets, which is exactly what we need right now.
Comment by Santa Barbara Real Estate Voice on 11 August 2008:
Depending on how steep of a discount, this could be scary. I imagine if they were able to drive too hard of a bargain, then complete towns would go under. Seeing the value of all the homes selling at extreme discounts would cause the neighbors to most likely walk away as well if they see their home drop an additional 20-30% percent below what a “normal foreclosure” on the block might of sold for.