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.

Related posts:

1. 90 Billion In Commercial Foreclosures – REITS and Vultures Racing In
2. South Carolina Blocks Foreclosures Until Housing Plan Enacted
3. Land Patent Scheme To Avoide Foreclosure Busted In San Diego
4. Small Fish Buying a Whale? Morgan Lane Marin Buying Pacific Union
5. Vornado Building $1 Billion Dollar Vulture Fund For Commercial Real Estate